Working women and their fertility choices

The paper formulates the fertility choice of a representative working woman in the context of a two-period OLG model. The starting point is a young working woman faced with the dilemma of having to simultaneous rear children and participate in the labor force. Discrete variable equivalents of marginal conditions are derived for a woman with no children to have one, and a woman with one child to have another. Explicit functional forms focus on the costs, benefits and trade-offs involved in the decision process. A discussion of the effects of introducing a pay-as-you-go pension scheme with an endogenous growth rate follows. An extension gives more detail to the working period by including a phase after child-rearing and before retirement. This formulation captures complications such as the choice to exit and possibly re-enter the labor force