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Fertility, Female Labor Supply, and Family Policy

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  • Hans Fehr
  • Daniela Ujhelyiova

Abstract

The present paper develops a general equilibrium model with overlapping generations and endogenous fertility in order to analyze the interaction between public policy and household labor supply and fertility decisions. The model's benchmark equilibrium reflects the current family policy as well as the differential fertility pattern of educational groups in Germany. Then we simulate alternative reforms of child benefits and family taxation that increase the long-run fertility and growth rate of the economy. Our simulations indicate two central results: First, although households are typically hurt by the first-order effects of family policy, it is possible to generate long-run welfare gains due to positive second-order effects from induced changes in the population structure. Second, specific family policies could be designed that yield a joint increase of the fertility rate and female employment rate as observed in cross-country studies.

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Bibliographic Info

Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 331.

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Length: 24 p.
Date of creation: 2010
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp331

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Keywords: stochastic fertility; general equilibrium life cycle model;

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References

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  1. DE LA CROIX, David & DOEPKE, Matthias, . "Inequality and growth: why differential fertility matters," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -1676, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Imrohoroglu, Selahattin & Kitao, Sagiri, 2009. "Labor supply elasticity and social security reform," Journal of Public Economics, Elsevier, Elsevier, vol. 93(7-8), pages 867-878, August.
  3. Andrés Erosa & Luisa Fuster & Diego Restuccia, 2002. "Fertility Decisions and Gender Differences in Labor Turnover, Employment, and Wages," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(4), pages 856-891, October.
  4. Nezih Guner & John Knowles, 2009. "Why is the rate of single-parenthood lower in Canada than in the U.S.? A dynamic equilibrium analysis of welfare policies," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 42(1), pages 56-89, February.
  5. Oded Galor, 2012. "The demographic transition: causes and consequences," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), Association Française de Cliométrie (AFC), vol. 6(1), pages 1-28, January.
  6. Woessmann, Ludger, 2004. "How Equal Are Educational Opportunities? Family Background and Student Achievement in Europe and the United States," IZA Discussion Papers 1284, Institute for the Study of Labor (IZA).
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  8. Patricia Apps & Ray Rees, 2004. "Fertility, Taxation and Family Policy," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 106(4), pages 745-763, December.
  9. Larry E. Jones & Alice Schoonbroodt & Michèle Tertilt, 2010. "Fertility Theories: Can They Explain the Negative Fertility-Income Relationship?," NBER Chapters, National Bureau of Economic Research, Inc, in: Demography and the Economy, pages 43-100 National Bureau of Economic Research, Inc.
  10. Matthias Doepke & Moshe Hazan & Yishay D. Maoz, 2008. "The Baby Boom and World War II: A Macroeconomic Analysis," IEW - Working Papers, Institute for Empirical Research in Economics - University of Zurich 355, Institute for Empirical Research in Economics - University of Zurich.
  11. Daniela Del Boca & Silvia Pasqua & Chiara Pronzato, 2008. "Motherhood and market work decisions in institutional context: A European perspective," Working Papers, "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), Università Commerciale Luigi Bocconi 011, "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), Università Commerciale Luigi Bocconi.
  12. Ahn, N. & Mira, P., 1999. "A Note on the Changing Relationship Between Fertility and Female Employment Rates in Developed Countries," Papers, Centro de Estudios Monetarios Y Financieros- 9903, Centro de Estudios Monetarios Y Financieros-.
  13. Elizabeth M. Caucutt & Nezih Guner & John Knowles, 2002. "Why Do Women Wait? Matching, Wage Inequality, and the Incentives for Fertility Delay," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(4), pages 815-855, October.
  14. José María Da Rocha & Luisa Fuster, 2006. "Why Are Fertility Rates And Female Employment Ratios Positively Correlated Across O.E.C.D. Countries?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(4), pages 1187-1222, November.
  15. Galor, Oded & Weil, David, 1995. "The Gender Gap, Fertility and Growth," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1157, C.E.P.R. Discussion Papers.
  16. Rafael Lalive & Josef Zweimüller, 2009. "How does Parental Leave Affect Fertility and Return to Work? Evidence from Two Natural Experiments," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 124(3), pages 1363-1402, August.
  17. Michele Boldrin & Larry E. Jones, 2002. "Mortality, Fertility, and Saving in a Malthusian Economy," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(4), pages 775-814, October.
  18. Viktor Steiner & Katharina Wrohlich, 2004. "Household Taxation, Income Splitting and Labor Supply Incentives: A Microsimulation Study for Germany," Discussion Papers of DIW Berlin 421, DIW Berlin, German Institute for Economic Research.
  19. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP): Scope, Evolution and Enhancements," SOEPpapers on Multidisciplinary Panel Data Research 1, DIW Berlin, The German Socio-Economic Panel (SOEP).
  20. Eissa, Nada & Hoynes, Hilary Williamson, 2004. "Taxes and the labor market participation of married couples: the earned income tax credit," Journal of Public Economics, Elsevier, Elsevier, vol. 88(9-10), pages 1931-1958, August.
  21. Hans Fehr & Manuel Kallweit & Fabian Kindermann, 2009. "Marital Risk, Family Insurance, and Public Policy," SOEPpapers on Multidisciplinary Panel Data Research 226, DIW Berlin, The German Socio-Economic Panel (SOEP).
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Citations

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Cited by:
  1. Hans Fehr & Manuel Kallweit & Fabian Kindermann, 2013. "Reforming Family Taxation in Germany: Labor Supply vs. Insurance Effects," SOEPpapers on Multidisciplinary Panel Data Research 613, DIW Berlin, The German Socio-Economic Panel (SOEP).
  2. Robert Fenge & Lisa Stadler, 2014. "Three Family Policies to Reconcile Fertility and Labor Supply," CESifo Working Paper Series 4922, CESifo Group Munich.
  3. Bick, Alexander, 2011. "The quantitative role of child care for female labor force participation and fertility," MPRA Paper 31713, University Library of Munich, Germany.

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