IDEAS home Printed from
   My bibliography  Save this article

Fertility decisions and endogenous residential sorting


  • Tumen, Semih


This paper develops a theoretical framework to consider fertility decisions within an endogenous sorting model of neighborhood effects. The models in the literature typically assume that each family is endowed with children whose expected schooling outcomes are determined by parental preferences on neighborhood quality. However, empirical studies report that the fertility dimension is also endogenous. Specifically, fertility is documented to be negatively related to neighborhood quality. We extend the model originally developed by Nesheim (2001) to account for endogenous fertility in a framework featuring endogenous contextual effects. Altruistic parents jointly choose how many children to produce and which neighborhood to live. We investigate whether the model can support an equilibrium where fertility is negatively related to neighborhood quality as the data suggest. We find that sorting over parental human capital cannot explain the observed negative relationship between fertility and neighborhood quality except for a restricted set of likely unrealistic parameter values. Sorting in terms of the human capital levels of children, however, can produce such an equilibrium for more reasonable parameter values.

Suggested Citation

  • Tumen, Semih, 2012. "Fertility decisions and endogenous residential sorting," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 78-87.
  • Handle: RePEc:eee:regeco:v:42:y:2012:i:1:p:78-87 DOI: 10.1016/j.regsciurbeco.2011.07.001

    Download full text from publisher

    File URL:
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Brock, William A. & Durlauf, Steven N., 2001. "Interactions-based models," Handbook of Econometrics,in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 54, pages 3297-3380 Elsevier.
    2. Sandra E. Black, 1999. "Do Better Schools Matter? Parental Valuation of Elementary Education," The Quarterly Journal of Economics, Oxford University Press, vol. 114(2), pages 577-599.
    3. Ivar Ekeland & James J. Heckman & Lars Nesheim, 2004. "Identification and Estimation of Hedonic Models," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 60-109, February.
    4. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," Journal of Political Economy, University of Chicago Press, vol. 115(4), pages 588-638, August.
    5. Becker, Gary S & Lewis, H Gregg, 1973. "On the Interaction between the Quantity and Quality of Children," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 279-288, Part II, .
    6. Karsten Hank, 2002. "Regional Social Contexts and Individual Fertility Decisions: A Multilevel Analysis of First and Second Births in Western Germany," Discussion Papers of DIW Berlin 270, DIW Berlin, German Institute for Economic Research.
    7. Hongbin Li & Junsen Zhang & Yi Zhu, 2008. "The quantity-Quality trade-Off of children In a developing country: Identification using chinese twins," Demography, Springer;Population Association of America (PAA), vol. 45(1), pages 223-243, February.
    8. Daniel Aaronson, 1998. "Using Sibling Data to Estimate the Impact of Neighborhoods on Children's Educational Outcomes," Journal of Human Resources, University of Wisconsin Press, vol. 33(4), pages 915-946.
    9. Leibowitz, Arleen, 1974. "Education and Home Production," American Economic Review, American Economic Association, vol. 64(2), pages 243-250, May.
    10. Iyer, S. & Weeks, M., 2009. "Social Interactions, Ethnicity and Fertility in Kenya," Cambridge Working Papers in Economics 0903, Faculty of Economics, University of Cambridge.
    11. William A. Brock & Steven N. Durlauf, 2001. "Discrete Choice with Social Interactions," Review of Economic Studies, Oxford University Press, vol. 68(2), pages 235-260.
    12. Goux, Dominique & Maurin, Eric, 2005. "The effect of overcrowded housing on children's performance at school," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 797-819, June.
    13. Joshua D. Angrist & Victor Lavy & Analia Schlosser, 2005. "New Evidence on the Causal Link Between the Quantity and Quality of Children," NBER Working Papers 11835, National Bureau of Economic Research, Inc.
    14. Oddbjørn Raaum & Kjell G. Salvanes & Erik O. Sørensen, 2006. "The Neighbourhood is Not What it Used to be," Economic Journal, Royal Economic Society, vol. 116(508), pages 200-222, January.
    15. 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 227-240, January.
    16. Clapp, John M. & Nanda, Anupam & Ross, Stephen L., 2008. "Which school attributes matter? The influence of school district performance and demographic composition on property values," Journal of Urban Economics, Elsevier, vol. 63(2), pages 451-466, March.
    17. Lien, Hsien-Ming & Wu, Wen-Chieh & Lin, Chu-Chia, 2008. "New evidence on the link between housing environment and children's educational attainments," Journal of Urban Economics, Elsevier, vol. 64(2), pages 408-421, September.
    18. repec:dau:papers:123456789/6486 is not listed on IDEAS
    19. Case, A.C. & Katz, L.F., 1991. "The Company You Keep: The Effects Of Family And Neighborhood On Disadvantaged Younths," Harvard Institute of Economic Research Working Papers 1555, Harvard - Institute of Economic Research.
    20. Hanushek, Eric A, 1992. "The Trade-Off between Child Quantity and Quality," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 84-117, February.
    21. James J. Heckman & Rosa L. Matzkin & Lars Nesheim, 2010. "Nonparametric Identification and Estimation of Nonadditive Hedonic Models," Econometrica, Econometric Society, vol. 78(5), pages 1569-1591, September.
    22. Ivar Ekeland & James J. Heckman & Lars Nesheim, 2002. "Identifying Hedonic Models," American Economic Review, American Economic Association, vol. 92(2), pages 304-309, May.
    23. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    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. Michael Kremer, 1997. "How Much does Sorting Increase Inequality?," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 115-139.
    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. Ross, Stephen & Yinger, John, 1999. "Sorting and voting: A review of the literature on urban public finance," Handbook of Regional and Urban Economics,in: P. C. Cheshire & E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 3, chapter 47, pages 2001-2060 Elsevier.
    28. John Knodel & Malinee Wongsith, 1991. "Family size and children’s education in Thailand: Evidence from a national sample," Demography, Springer;Population Association of America (PAA), vol. 28(1), pages 119-131, February.
    Full references (including those not matched with items on IDEAS)


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

    Cited by:

    1. Semih Tumen, 2016. "A theory of intra-firm group design," Journal of Productivity Analysis, Springer, vol. 45(1), pages 89-102, February.
    2. Hiroshi Aiura & Yasuhiro Sato, 2014. "A model of urban demography," Canadian Journal of Economics, Canadian Economics Association, vol. 47(3), pages 981-1009, August.
    3. ISHIDA Ryo & OGURO Kazumasa & YASUOKA Masaya, 2015. "Population Density, Fertility, and Childcare Services from the Perspective of a Two-Region Overlapping Generations Model," Discussion papers 15093, Research Institute of Economy, Trade and Industry (RIETI).

    More about this item


    Residential sorting; Endogenous fertility; Neighborhood effects; Hedonic prices; Segregation;

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population


    Access and download statistics


    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:eee:regeco:v:42:y:2012:i:1:p:78-87. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.