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Social externalities, endogenous childcare costs, and fertility choice

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  • Ratbek Dzhumashev

    (Monash University)

  • Ainura Tursunalieva

    (Monash University)

Abstract

We reconcile the steep decline in fertility rates during the demographic transition with the fertility rebound observed in recent decades in high-income countries. The micro-foundations of the optimal choice of agents in our expanded model include endogenous childcare costs and social externalities stemming from human capital, consumption, and fertility norms. Combining these factors with the quality-quantity trade-off in fertility choice explains the inverse J-shaped relationship between fertility and economic development. Moreover, the simulated average fertility rates based on the model are reasonably consistent with the observed pattern of the evolution of the cohort fertility rates in high-income countries. Sensitivity analyses show that the model fits historical cohort fertility rates only when it includes the effects of social externalities and endogenous childcare costs.

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  • Ratbek Dzhumashev & Ainura Tursunalieva, 2023. "Social externalities, endogenous childcare costs, and fertility choice," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(1), pages 397-429, January.
    • Handle: RePEc:spr:jopoec:v:36:y:2023:i:1:d:10.1007_s00148-021-00885-8
    DOI: 10.1007/s00148-021-00885-8
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    1. Alessandra Casarico & Elena Del Rey & Jose I. Silva, 2023. "Child care costs, household liquidity constraints, and gender inequality," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(3), pages 1461-1487, July.

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    More about this item

    Keywords

    Fertility rate; Social externalities; Childcare costs; Demographic transition; Fertility rebound;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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