IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/58237.html
   My bibliography  Save this paper

Fertility Choice and Financial Development

Author

Listed:
  • Filoso, Valerio
  • Papagni, Erasmo

Abstract

We study the consequences of broader access to credit and capital markets on household decisions over the number of children. A model of the net reproduction rate is estimated on data from 78 countries over the period 1995{2010. Liquidity constraints are approximated by private credit and household credit, while opportunities for financial investment are measured by the domestic public debt. We use the Index of Financial Liberalisation (Abiad et al., 2009) as one of the instruments for the financial variables. We find that improved access to credit increases fertility with an elasticity of around 30%, while the effect of the development of capital markets is negative (-10%). The regression model takes the role of social security into account. Quantile regression shows that our results are robust to outliers and parameter heterogeneity.

Suggested Citation

  • Filoso, Valerio & Papagni, Erasmo, 2014. "Fertility Choice and Financial Development," MPRA Paper 58237, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:58237
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/58237/1/MPRA_paper_58237.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Beck Thorsten & Büyükkarabacak Berrak & Rioja Felix K. & Valev Neven T., 2012. "Who Gets the Credit? And Does It Matter? Household vs. Firm Lending Across Countries," The B.E. Journal of Macroeconomics, De Gruyter, vol. 12(1), pages 1-46, March.
    2. James Feyrer & Bruce Sacerdote & Ariel Dora Stern, 2008. "Will the Stork Return to Europe and Japan? Understanding Fertility within Developed Nations," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 3-22, Summer.
    3. Oded Galor, 2012. "The demographic transition: causes and consequences," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 6(1), pages 1-28, January.
    4. Michele BOLDRIN & Mariacristina DE NARDI & Larry E. JONES, 2015. "Fertility and Social Security," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 81(3), pages 261-299, September.
    5. Luis Angeles, 2010. "Demographic transitions: analyzing the effects of mortality on fertility," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(1), pages 99-120, January.
    6. Burgoon, Brian & Demetriades, Panicos & Underhill, Geoffrey R.D., 2012. "Sources and legitimacy of financial liberalization," European Journal of Political Economy, Elsevier, vol. 28(2), pages 147-161.
    7. Cigno, Alessandro, 1993. "Intergenerational transfers without altruism : Family, market and state," European Journal of Political Economy, Elsevier, vol. 9(4), pages 505-518, November.
    8. Theodore W. Schultz, 1974. "Economics of the Family: Marriage, Children, and Human Capital," NBER Books, National Bureau of Economic Research, Inc, number schu74-1, March.
    9. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731, January.
    10. Willis, Robert J, 1973. "A New Approach to the Economic Theory of Fertility Behavior," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 14-64, Part II, .
    11. Cigno, Alessandro & Rosati, Furio C., 1996. "Jointly determined saving and fertility behaviour: Theory, and estimates for Germany, Italy, UK and USA," European Economic Review, Elsevier, vol. 40(8), pages 1561-1589, November.
    12. Mark Pin & Shahidur Khandker & Signe-Mary Mckernan & M. Latif, 1999. "Credit programs for the poor and reproductive behavior in low-income countries: Are the reported causal relationships the result of heterogeneity bias?," Demography, Springer;Population Association of America (PAA), vol. 36(1), pages 1-21, February.
    13. Neher, Philip A, 1971. "Peasants, Procreation, and Pensions," American Economic Review, American Economic Association, vol. 61(3), pages 380-389, June.
    14. Abdul Abiad & Ashoka Mody, 2005. "Financial Reform: What Shakes It? What Shapes It?," American Economic Review, American Economic Association, vol. 95(1), pages 66-88, March.
    15. Norman Loayza & Klaus Schmidt-Hebbel & Luis Servén, 2000. "What Drives Private Saving Across the World?," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 165-181, May.
    16. M. R. Rosenzweig & Stark, O. (ed.), 1997. "Handbook of Population and Family Economics," Handbook of Population and Family Economics, Elsevier, edition 1, volume 1, number 1.
    17. Barro, Robert J. & Lee, Jong Wha, 2013. "A new data set of educational attainment in the world, 1950–2010," Journal of Development Economics, Elsevier, vol. 104(C), pages 184-198.
    18. Ugo Panizza, 2008. "Domestic And External Public Debt In Developing Countries," UNCTAD Discussion Papers 188, United Nations Conference on Trade and Development.
    19. Badi H. Baltagi, 2021. "Simultaneous Equations with Error Components," Springer Texts in Business and Economics, in: Econometric Analysis of Panel Data, edition 6, chapter 0, pages 157-186, Springer.
    20. Borck, Rainald & Wrohlich, Katharina, 2011. "Preferences for childcare policies: Theory and evidence," European Journal of Political Economy, Elsevier, vol. 27(3), pages 436-454, September.
    21. Eckstein, Zvi & Wolpin, Kenneth I., 1985. "Endogenous fertility and optimal population size," Journal of Public Economics, Elsevier, vol. 27(1), pages 93-106, June.
    22. Cigno, Alessandro & Rosati, Furio Camillo, 1992. "The Effects of Financial Markets and Social Security on Saving and Fertility Behaviour in Italy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 5(4), pages 319-341.
    23. Nishimura, Kazuo & Zhang, Junsen, 1992. "Pay-as-you-go public pensions with endogenous fertility," Journal of Public Economics, Elsevier, vol. 48(2), pages 239-258, July.
    24. Gary S. Becker & Robert J. Barro, 1988. "A Reformulation of the Economic Theory of Fertility," The Quarterly Journal of Economics, Oxford University Press, vol. 103(1), pages 1-25.
    25. 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.
    26. Gary S. Becker, 1960. "An Economic Analysis of Fertility," NBER Chapters, in: Demographic and Economic Change in Developed Countries, pages 209-240, National Bureau of Economic Research, Inc.
    27. Thorsten Beck & Asli Demirgüç-Kunt & Ross Levine, 2000. "A New Database on the Structure and Development of the Financial Sector," The World Bank Economic Review, World Bank Group, vol. 14(3), pages 597-605, September.
    28. Galasso, Vincenzo & Profeta, Paola, 2002. "The political economy of social security: a survey," European Journal of Political Economy, Elsevier, vol. 18(1), pages 1-29, March.
    29. Carol Scotese Lehr, 1999. "Banking on fewer children: Financial intermediation, fertility and economic development," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(4), pages 567-590.
    30. Larry E. Jones & Alice Schoonbroodt & Michèle Tertilt, 2010. "Fertility Theories: Can They Explain the Negative Fertility-Income Relationship?," NBER Chapters, in: Demography and the Economy, pages 43-100, National Bureau of Economic Research, Inc.
    31. Matthias Doepke, 2005. "Child mortality and fertility decline: Does the Barro-Becker model fit the facts?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 18(2), pages 337-366, June.
    32. Abdul Abiad & Ashoka Mody, 2005. "Financial Reform: What Shakes It? What Shapes It?," American Economic Review, American Economic Association, vol. 95(1), pages 66-88, March.
    33. Schuler, Sidney Ruth & Hashemi, Syed Mesbahuddin & Riley, Ann P., 1997. "The influence of women's changing roles and status in Bangladesh's fertility transition: Evidence from a study of credit programs and contraceptive use," World Development, Elsevier, vol. 25(4), pages 563-575, January.
    34. De Gregorio, Jose, 1996. "Borrowing constraints, human capital accumulation, and growth," Journal of Monetary Economics, Elsevier, vol. 37(1), pages 49-71, February.
    35. Gary S. Becker & H. Gregg Lewis, 1974. "Interaction between Quantity and Quality of Children," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 81-90, National Bureau of Economic Research, Inc.
    36. Andrews,Donald W. K. & Stock,James H. (ed.), 2005. "Identification and Inference for Econometric Models," Cambridge Books, Cambridge University Press, number 9780521844413.
    37. Ehrlich, Isaac & Lui, Francis T, 1991. "Intergenerational Trade, Longevity, and Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 1029-1059, October.
    38. Asli Demirguc-Kunt & Ross Levine (ed.), 2004. "Financial Structure and Economic Growth: A Cross-Country Comparison of Banks, Markets, and Development," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262541793, December.
    39. Berthold U. Wigger, 1999. "Public Pensions and Growth," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 56(2), pages 241-241, June.
    40. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-1458, December.
    41. Theodore W. Schultz, 1974. "References and Index to "Economics of the Family: Marriage, Children, and Human Capital"," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 549-584, National Bureau of Economic Research, Inc.
    42. Carol Scotese Lehr, 2009. "Evidence on the Demographic Transition," The Review of Economics and Statistics, MIT Press, vol. 91(4), pages 871-887, November.
    43. Thorsten Beck & Asli Demirgüç-Kunt & Ross Levine, 2010. "Financial Institutions and Markets across Countries and over Time: The Updated Financial Development and Structure Database," The World Bank Economic Review, World Bank Group, vol. 24(1), pages 77-92, January.
    44. World Bank, 2007. "World Development Indicators 2007," World Bank Publications - Books, The World Bank Group, number 8150, December.
    45. Loayza, Norman & Schmidt-Hebbel, Klaus & Serven, Luis, 2000. "What drives private saving around the world?," Policy Research Working Paper Series 2309, The World Bank.
    46. Leonid Azarnert, 2006. "Child mortality, fertility, and human capital accumulation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(2), pages 285-297, June.
    47. Fiona Steele & Sajeda Amin & Ruchira Naved, 2001. "Savings/credit group formation and change in contraception," Demography, Springer;Population Association of America (PAA), vol. 38(2), pages 267-282, May.
    48. Isaac Ehrlich & Jinyoung Kim, 2007. "Social Security and Demographic Trends: Theory and Evidence from the International Experience," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(1), pages 55-77, January.
    49. Becker, Gary S, 1974. "A Theory of Marriage: Part II," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages 11-26, Part II, .
    50. Rajan, Raghuram G. & Zingales, Luigi, 2003. "The great reversals: the politics of financial development in the twentieth century," Journal of Financial Economics, Elsevier, vol. 69(1), pages 5-50, July.
    51. Assaf Razin & Efraim Sadka, 1995. "Population Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262181606, December.
    52. Gary S. Becker, 1974. "A Theory of Marriage," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 299-351, National Bureau of Economic Research, Inc.
    53. Lagerlof, Nils-Petter, 1997. "Endogenous fertility and the old-age security hypothesis: A note," Journal of Public Economics, Elsevier, vol. 64(2), pages 279-286, May.
    54. repec:ucp:bknber:9780226740867 is not listed on IDEAS
    55. Berthold U. Wigger, 1999. "Pay-as-you-go financed public pensions in a model of endogenous growth and fertility," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(4), pages 625-640.
    56. World Bank, 2010. "World Development Indicators 2010," World Bank Publications - Books, The World Bank Group, number 4373, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Financial development and fertility
      by Economic Logician in Economic Logic on 2010-11-27 00:42:00

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. George Naufal, 2015. "Impact of remittances on fertility," IZA World of Labor, Institute of Labor Economics (IZA), pages 207-207, November.
    2. Aeggarchat Sirisankanan, 2020. "Credit constraints and the trade‐off between family size and children's investment in Thailand," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 34(2), pages 133-151, November.
    3. Samyukta Bhupatiraju, 2022. "Fertility and financial development: an analysis of Indian households," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(2), pages 589-606, April.
    4. Govindapuram Suresh, 2023. "Financial Inclusion and Its Impact on Fertility: An Empirical Investigation," Indian Journal of Human Development, , vol. 17(2), pages 344-358, August.
    5. Dong‐Hyeon Kim & Ting‐Cih Chen & Shu‐Chin Lin, 2023. "Fertility and banking development: New panel evidence," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 4220-4235, October.
    6. Awaworyi Churchill, Sefa & Smyth, Russell & Trinh, Trong-Anh & Yew, Siew Ling, 2022. "Local crime and fertility," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 312-331.
    7. Donou-Adonsou, Ficawoyi, 2022. "The effects of health conditions on financial sector development," Economic Modelling, Elsevier, vol. 114(C).
    8. Muhammad Zakaria & Bashir Ahmed Fida & Saquib Yousaf Janjua & Syed Jawad Hussain Shahzad, 2017. "Fertility and Financial Development in South Asia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 133(2), pages 645-668, September.
    9. Bloom, David E. & Kuhn, Michael & Prettner, Klaus, 2023. "Fertility in High-Income Countries: Trends, Patterns, Determinants, and Consequences," IZA Discussion Papers 16500, Institute of Labor Economics (IZA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Luciano Fanti & Luca Gori, 2014. "Endogenous fertility, endogenous lifetime and economic growth: the role of child policies," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(2), pages 529-564, April.
    2. Cigno, A., 2016. "Conflict and Cooperation Within the Family, and Between the State and the Family, in the Provision of Old-Age Security," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 609-660, Elsevier.
    3. Vincenzo Galasso & Roberta Gatti & Paola Profeta, 2009. "Investing for the old age: pensions, children and savings," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(4), pages 538-559, August.
    4. Francesco C. Billari & Vincenzo Galasso, 2008. "What Explains Fertility? Evidence from Italian Pension Reforms," CSEF Working Papers 209, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    5. Papagni, Erasmo, 2018. "Fertility Transitions in Developing Countries: Convergence, Timing, and Causes," GLO Discussion Paper Series 248, Global Labor Organization (GLO).
    6. Muhammad Zakaria & Bashir Ahmed Fida & Saquib Yousaf Janjua & Syed Jawad Hussain Shahzad, 2017. "Fertility and Financial Development in South Asia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 133(2), pages 645-668, September.
    7. Siew Ling Yew & Jie Zhang, 2018. "Health spending, savings and fertility in a lifecycle‐dynastic model with longevity externalities," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 51(1), pages 186-215, February.
    8. Robert Fenge & Beatrice Scheubel, 2017. "Pensions and fertility: back to the roots," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(1), pages 93-139, January.
    9. Larry E. Jones & Alice Schoonbroodt & Michèle Tertilt, 2010. "Fertility Theories: Can They Explain the Negative Fertility-Income Relationship?," NBER Chapters, in: Demography and the Economy, pages 43-100, National Bureau of Economic Research, Inc.
    10. Koichi Miyazaki, 2013. "Pay-as-you-go social security and endogenous fertility in a neoclassical growth model," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(3), pages 1233-1250, July.
    11. Bishnu, Monisankar & Garg, Shresth & Garg, Tishara & Ray, Tridip, 2023. "Intergenerational transfers: Public education and pensions with endogenous fertility," Journal of Economic Dynamics and Control, Elsevier, vol. 153(C).
    12. Luciano Fanti & Luca Gori, 2012. "Public Expenditure on Health and Private Old-Age Insurance in an OLG Growth Model with Endogenous Fertility: Chaotic Dynamics Under Perfect Foresight," Computational Economics, Springer;Society for Computational Economics, vol. 40(4), pages 333-353, December.
    13. Michele BOLDRIN & Mariacristina DE NARDI & Larry E. JONES, 2015. "Fertility and Social Security," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 81(3), pages 261-299, September.
    14. Robinson, James A. & Srinivasan, T.N., 1993. "Long-term consequences of population growth: Technological change, natural resources, and the environment," Handbook of Population and Family Economics, in: M. R. Rosenzweig & Stark, O. (ed.), Handbook of Population and Family Economics, edition 1, volume 1, chapter 21, pages 1175-1298, Elsevier.
    15. Dong‐Hyeon Kim & Ting‐Cih Chen & Shu‐Chin Lin, 2023. "Fertility and banking development: New panel evidence," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 4220-4235, October.
    16. Meier, Volker & Wrede, Matthias, 2010. "Pensions, fertility, and education," Journal of Pension Economics and Finance, Cambridge University Press, vol. 9(1), pages 75-93, January.
    17. Nguyen Thang Dao & Julio Dávila & Angela Greulich, 2021. "The education gender gap and the demographic transition in developing countries," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(2), pages 431-474, April.
    18. Dierk Herzer & Holger Strulik & Sebastian Vollmer, 2012. "The long-run determinants of fertility: one century of demographic change 1900–1999," Journal of Economic Growth, Springer, vol. 17(4), pages 357-385, December.
    19. Marla Ripoll & Juan Carlos Cordoba, 2011. "A Contribution to the Economic Theory of Fertility," 2011 Meeting Papers 1207, Society for Economic Dynamics.
    20. Robert Fenge & Beatrice Scheubel, 2013. "Pensions and Fertility: Back to the Roots - The Introduction of Bismarck's Pension Scheme and the European Fertility Decline," CESifo Working Paper Series 4383, CESifo.

    More about this item

    Keywords

    Fertility; Financial Market Development; Old-Age Security.;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D10 - Microeconomics - - Household Behavior - - - General
    • G1 - Financial Economics - - General Financial Markets
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:58237. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.