Employment and Fertility Choice: A Differential Game Approach
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.
Volume (Year): 10 (2007)
Issue (Month): 9 ()
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