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Does Fertility Decrease the Welfare of Households? An Analysis of Poverty Dynamics and Fertility in Indonesia

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Author Info
Kim Jungho
Henriette Engelhardt
Alexia Prskawetz
Arnstein Aassve

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Abstract

It is generally accepted that lower population growth is associated with positive economic development. Although there is a large body of literature supporting this hypothesis at the macro level, few studies have analyzed the causal e®ect of fertility on household welfare at the micro level. In this paper we present an empirical analysis of the relationship between household welfare and fertility for Indonesia - a country which has experienced unprecedented economic growth and sharp fertility declines over recent decades. The focus of our paper is twofold: First, we introduce and apply propensity score matching methods to study the rela- tionship between fertility outcomes and economic variables at the household level. Secondly, we explicitly test for the sensitivity of our results with respect to alternative measures of welfare at the household level. When consumption expenditure per person is used as a measure of welfare, the analysis suggests that the correlation between fertility and household welfare is sensitive to the choice of the parameters governing economics of scale and equivalence scales at the household level. The lower these values are the less likely will an additional child depress household welfare. On the other hand, when the share of food in total expenditure is used as a measure of welfare, the result does not produce a decisive sign of the correlation between fertility and household welfare.

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Paper provided by Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna in its series Working Papers with number 0506.

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Length: 20 pages
Date of creation: May 2009
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Handle: RePEc:vid:wpaper:0506

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Related research
Keywords: Poverty Dynamics; Fertility; Welfare; Household Size; Indonesia;

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  2. Deaton, Angus S & Muellbauer, John, 1986. "On Measuring Child Costs: With Applications to Poor Countries," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 720-44, August. [Downloadable!] (restricted)
  3. Koulovatianos, Christos & Schroder, Carsten & Schmidt, Ulrich, 2005. "On the income dependence of equivalence scales," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 967-996, June. [Downloadable!] (restricted)
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  4. Ravallion, Martin, 1996. "Issues in Measuring and Modelling Poverty," Economic Journal, Royal Economic Society, vol. 106(438), pages 1328-43, September. [Downloadable!] (restricted)
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  5. Mark R. Rosenzweig & Kenneth I. Wolpin, 2000. "Natural "Natural Experiments" in Economics," Journal of Economic Literature, American Economic Association, vol. 38(4), pages 827-874, December. [Downloadable!] (restricted)
  6. Angrist, Joshua D & Evans, William N, 1998. "Children and Their Parents' Labor Supply: Evidence from Exogenous Variation in Family Size," American Economic Review, American Economic Association, vol. 88(3), pages 450-77, June. [Downloadable!] (restricted)
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  7. Lanjouw, Peter & Ravallion, Martin, 1995. "Poverty and Household Size," Economic Journal, Royal Economic Society, vol. 105(433), pages 1415-34, November. [Downloadable!] (restricted)
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  8. Rosenzweig, Mark R & Wolpin, Kenneth I, 1980. "Testing the Quantity-Quality Fertility Model: The Use of Twins as a Natural Experiment," Econometrica, Econometric Society, vol. 48(1), pages 227-40, January. [Downloadable!] (restricted)
  9. Rosenzweig, Mark R & Schultz, T Paul, 1985. "The Demand for and Supply of Births: Fertility and Its Life Cycle Consequences," American Economic Review, American Economic Association, vol. 75(5), pages 992-1015, December. [Downloadable!] (restricted)
  10. Eastwood, Robert & Lipton, Michael, 1997. "The impact of changes in human fertility on poverty," Discussion Papers in Economics 01/97, Department of Economics, University of Sussex. [Downloadable!]
  11. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Blackwell Publishing, vol. 65(2), pages 261-94, April. [Downloadable!] (restricted)
  12. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May. [Downloadable!] (restricted)
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  13. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November. [Downloadable!]
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