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Employment and Fertility Choice: A Differential Game Approach

Author

Listed:
  • Le Wang

    () (University of Minnesota)

  • Joao Ricardo Faria

    () (University of Texas Pan American)

Abstract

For OECD countries there is an intriguing variety of combinations between total fertility rate (TFR) and female labor force participation rate (FPR) suggesting the existence of multiple equilibria. This paper provides a differential game framework where the employment choices by husband and wife affect a family's fertility. The model has multiple open-loop equilibria characterized by different combinations of FPR and TFR that are consistent with the empirical cross-country evidence. The dynamic trajectory from one equilibrium point to another also sheds lights on possible demographic transition of individual countries as displayed in their time series data. The model stresses that the husband's employment decisions are as important as wife's in determining family size.

Suggested Citation

  • Le Wang & Joao Ricardo Faria, 2007. "Employment and Fertility Choice: A Differential Game Approach," Economics Bulletin, AccessEcon, vol. 10(9), pages 1-8.
  • Handle: RePEc:ebl:ecbull:eb-07j00004
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    References listed on IDEAS

    as
    1. Jacob Mincer, 1962. "Labor Force Participation of Married Women: A Study of Labor Supply," NBER Chapters,in: Aspects of Labor Economics, pages 63-105 National Bureau of Economic Research, Inc.
    2. Theodore C. Bergstrom, 1996. "Economics in a Family Way," Journal of Economic Literature, American Economic Association, vol. 34(4), pages 1903-1934, December.
    3. Theodore C. Bergstrom, 1996. "Economics in a Family Way," Journal of Economic Literature, American Economic Association, vol. 34(4), pages 1903-1934, December.
    4. Pedro Mira & Namkee Ahn, 2002. "A note on the changing relationship between fertility and female employment rates in developed countries," Journal of Population Economics, Springer;European Society for Population Economics, vol. 15(4), pages 667-682.
    5. Francesc Ortega & Ryuichi Tanaka, 2007. "Gender specialization in households: An empirical analysis," Economics Working Papers 1021, Department of Economics and Business, Universitat Pompeu Fabra.
    6. Bettio, Francesca & Villa, Paola, 1998. "A Mediterranean Perspective on the Breakdown of the Relationship between Participation and Fertility," Cambridge Journal of Economics, Oxford University Press, vol. 22(2), pages 137-171, March.
    7. George A. Akerlof & Rachel E. Kranton, 2000. "Economics and Identity," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 715-753.
    8. Shelly Lundberg & Robert A. Pollak, 1996. "Bargaining and Distribution in Marriage," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 139-158, Fall.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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