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Optimal life-cycle fertility in a Barro-Becker economy

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  • Pierre Pestieau
  • Gregory Ponthiere

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Abstract

Parenthood postponement is a key demographic trend of the last three decades. In order to rationalize that stylized fact, we extend the canonical model by Barro and Becker (Econometrica 57:481–501, 1989 ) to include two—instead of one—reproduction periods. We examine how the cost structure of early and late children in terms of time and goods affects the optimal fertility timing. Then, we identify conditions that guarantee the existence and uniqueness of a stationary equilibrium with a stationary cohort size. Finally, we examine how the model can rationalize the observed postponement of births, and we highlight two plausible causes: (1) a general rise in the cost of children in terms of goods and (2) a decline in the degree of family altruism. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Pierre Pestieau & Gregory Ponthiere, 2015. "Optimal life-cycle fertility in a Barro-Becker economy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(1), pages 45-87, January.
  • Handle: RePEc:spr:jopoec:v:28:y:2015:i:1:p:45-87 DOI: 10.1007/s00148-014-0511-2
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    References listed on IDEAS

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    1. Ermisch, John & Ogawa, Naohiro, 1994. "Age at Motherhood in Japan," Journal of Population Economics, Springer;European Society for Population Economics, vol. 7(4), pages 393-420, November.
    2. Cigno, Alessandro & Ermisch, John, 1989. "A microeconomic analysis of the timing of births," European Economic Review, Elsevier, vol. 33(4), pages 737-760, April.
    3. Ehrlich, Isaac & Lui, Francis T, 1991. "Intergenerational Trade, Longevity, and Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 1029-1059, October.
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    5. Ronald Lee, 2003. "The Demographic Transition: Three Centuries of Fundamental Change," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 167-190, Fall.
    6. Barro, Robert J & Becker, Gary S, 1989. "Fertility Choice in a Model of Economic Growth," Econometrica, Econometric Society, pages 481-501.
    7. Schultz, T Paul, 1985. "Changing World Prices, Women's Wages, and the Fertility Transition: Sweden, 1860-1910," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1126-1154, December.
    8. Pierre Pestieau & Gregory Ponthiere, 2014. "Optimal fertility along the life cycle," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 55(1), pages 185-224, January.
    9. d'Albis, Hippolyte & Augeraud-Véron, Emmanuelle & Schubert, Katheline, 2010. "Demographic-economic equilibria when the age at motherhood is endogenous," Journal of Mathematical Economics, Elsevier, pages 1211-1221.
    10. Heckman, James J & Walker, James R, 1990. "The Relationship between Wages and Income and the Timing and Spacing of Births: Evidence from Swedish Longitudinal Data," Econometrica, Econometric Society, vol. 58(6), pages 1411-1441, November.
    11. Samuelson, Paul A, 1975. "The Optimum Growth Rate for Population," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(3), pages 531-538, October.
    12. Matthias Doepke, 2002. "Child Mortality and Fertility Decline: Does the Barro-Becker Model Fit the Facts?," UCLA Economics Working Papers 824, UCLA Department of Economics.
    13. Siv Gustafsson, 2001. "Optimal age at motherhood. Theoretical and empirical considerations on postponement of maternity in Europe," Journal of Population Economics, Springer;European Society for Population Economics, vol. 14(2), pages 225-247.
    14. John Ermisch, 1988. "Econometric Analysis of Birth Rate Dynamics in Britain," Journal of Human Resources, University of Wisconsin Press, vol. 23(4), pages 563-576.
    15. Shekhar Aiyar & Carl-Johan Dalgaard, 2005. "Total Factor Productivity Revisited: A Dual Approach to Development Accounting," IMF Staff Papers, Palgrave Macmillan, vol. 52(1), pages 82-102, April.
    16. Matthias Doepke, 2005. "Child mortality and fertility decline: Does the Barro-Becker model fit the facts?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 18(2), pages 337-366, June.
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    Citations

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    Cited by:

    1. Gregory Ponthiere, 2016. "The contribution of improved joint survival conditions to living standards: an equivalent consumption approach," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 46(2), pages 407-449, February.
    2. Hippolyte D'Albis & Angela Greulich & Grégory Ponthière, 2017. "Development, fertility and childbearing age: A unified growth theory," PSE Working Papers halshs-01452846, HAL.
    3. Pierre Pestieau & Gregory Ponthiere, 2014. "Optimal fertility along the life cycle," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 55(1), pages 185-224, January.
    4. Andras Simonovits, 2015. "Optimal Child-Related Transfers and Personal Income Tax with Endogenous Fertility," IEHAS Discussion Papers 1524, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    5. repec:hal:wpaper:halshs-01131236 is not listed on IDEAS
    6. Pestieau, Pierre & Ponthiere, Gregory, 2016. "Long-term care and births timing," Journal of Health Economics, Elsevier, pages 340-357.
    7. Andras Simonovits, 2015. "Socially Optimal Child-Related Transfers and Personal Income Tax with Endogenous Fertility," IEHAS Discussion Papers 1537, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    8. repec:hal:wpaper:halshs-01194427 is not listed on IDEAS

    More about this item

    Keywords

    Fertility; Birth timing; Population; Dynastic altruism; OLG model; D10; J13; O40;

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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