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When having many children pays: a case study from Taiwan


  • Mun Lai



The objective of this paper is to investigate the direct financial cost and benefit of raising children during a demographic transition in Taiwan, and to examine whether fertility decline is consistent with Caldwell’s wealth flow theory, which states that fertility decline is caused by reduced benefits of children. The paper describes a method of estimating the average economic returns of children over the entire parental lifecycle, using a 42-year span of Taiwanese household and individual economic pseudo-panel data. Results show that returns to children may turn positive and are not highly negative all the time, as found in the previous literature. Copyright Springer-Verlag 2012

Suggested Citation

  • Mun Lai, 2012. "When having many children pays: a case study from Taiwan," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(1), pages 323-348, January.
  • Handle: RePEc:spr:jopoec:v:25:y:2012:i:1:p:323-348
    DOI: 10.1007/s00148-011-0373-9

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    References listed on IDEAS

    1. Luis Angeles, 2010. "Demographic transitions: analyzing the effects of mortality on fertility," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(1), pages 99-120, January.
    2. Bernheim, B Douglas & Shleifer, Andrei & Summers, Lawrence H, 1986. "The Strategic Bequest Motive," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages 151-182, July.
    3. Jensen, Eric R, 1990. "An Econometric Analysis of the Old-Age Security Motive for Childbearing," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(4), pages 953-968, November.
    4. Shin-Yi Chou & Jin-Tan Liu & Michael Grossman & Ted Joyce, 2010. "Parental Education and Child Health: Evidence from a Natural Experiment in Taiwan," American Economic Journal: Applied Economics, American Economic Association, vol. 2(1), pages 33-61, January.
    5. Cigno, Alessandro, 1992. "Children and Pensions," Journal of Population Economics, Springer;European Society for Population Economics, vol. 5(3), pages 175-183, August.
    6. Prema-Chandra Athukorala & Pang-Long Tsai, 2003. "Determinants of Household Saving in Taiwan: Growth, Demography and Public Policy," Journal of Development Studies, Taylor & Francis Journals, vol. 39(5), pages 65-88.
    7. William L. Parish & Robert J. Willis, 1993. "Daughters, Education, and Family Budgets Taiwan Experiences," Journal of Human Resources, University of Wisconsin Press, vol. 28(4), pages 863-898.
    8. Iyer, Sriya & Velu, Chander, 2006. "Real options and demographic decisions," Journal of Development Economics, Elsevier, vol. 80(1), pages 39-58, June.
    9. Andrew Mason & Ronald Lee & An-Chi Tung & Mun-Sim Lai & Tim Miller, 2009. "Population Aging and Intergenerational Transfers: Introducing Age into National Accounts," NBER Chapters,in: Developments in the Economics of Aging, pages 89-122 National Bureau of Economic Research, Inc.
    10. Cain, Glen G, 1971. "Issues in the Economics of a Population Policy for the United States," American Economic Review, American Economic Association, vol. 61(2), pages 408-417, May.
    11. Ermisch, John, 1989. "Intergenerational Transfers in Industrialised Countries: Effects of Age Distribution and Economic Institutions," Journal of Population Economics, Springer;European Society for Population Economics, vol. 1(4), pages 269-284.
    12. Zhang, Junsen, 1990. "Mortality and Fertility: How Large Is the Direct Child Replacement Effect in China?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 3(4), pages 303-314, December.
    13. Schultz, T Paul, 1969. "An Economic Model of Family Planning and Fertility," Journal of Political Economy, University of Chicago Press, vol. 77(2), pages 153-180, March/Apr.
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    More about this item


    Cost and benefit of children; Fertility; Familial transfers; J13; D10; I2;

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • D10 - Microeconomics - - Household Behavior - - - General
    • I2 - Health, Education, and Welfare - - Education


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