IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2503.02237.html

Fertility Choices with Career Risk

Author

Listed:
  • Ruiwu Liu

Abstract

Couples decide whether to have children before knowing the persistent career loss generated by parenthood. After the loss is realized, household resources are renegotiated and individual market earnings partly determine outside options. This limited-commitment friction places a disproportionate share of female earnings risk on the wife even when expected household resources are unchanged. We embed this mechanism in a generalized-Nash fertility bargain. The model has a unique positive agreement whenever both spouses have positive marginal gains at zero fertility. A larger expected child penalty and greater career-loss risk reduce agreed fertility. A higher loading of own earnings into outside options reduces fertility precisely when the wife's participation margin dominates the husband's corresponding gain. Insurance against the unexpected component of the career loss raises fertility without subsidizing its mean, whereas a conventional per-child transfer operates only through expected cost. A full-commitment benchmark isolates the risk-sharing distortion. In an illustrative discrete-parity exercise, rising career risk lowers desired family size from three children to two and then one, while partial earnings-loss insurance can restore the three-child outcome. These results identify a policy margin that is not available in a deterministic participation-constraint model: insurance against the distribution of the child penalty.

Suggested Citation

  • Ruiwu Liu, 2025. "Fertility Choices with Career Risk," Papers 2503.02237, arXiv.org, revised Aug 2026.
    • Handle: RePEc:arx:papers:2503.02237
    as

    Download full text from publisher

    File URL: https://arxiv.org/pdf/2503.02237
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 83-116.
    2. James Feyrer & Bruce Sacerdote & Ariel Dora Stern, 2008. "Will the Stork Return to Europe and Japan? Understanding Fertility within Developed Nations," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 3-22, Summer.
    3. Gary S. Becker, 1981. "A Treatise on the Family," NBER Books, National Bureau of Economic Research, Inc, number beck81-1.
    4. Kalemli-Ozcan, Sebnem, 2003. "A stochastic model of mortality, fertility, and human capital investment," Journal of Development Economics, Elsevier, vol. 70(1), pages 103-118, February.
    5. Bloom, David E. & Canning, David & Sevilla, Jaypee, 2004. "The Effect of Health on Economic Growth: A Production Function Approach," World Development, Elsevier, vol. 32(1), pages 1-13, January.
    6. Peter Mcdonald, 2006. "Low Fertility and the State: The Efficacy of Policy," Population and Development Review, The Population Council, Inc., vol. 32(3), pages 485-510, September.
    7. Ronald Lee & Andrew Mason, 2010. "Fertility, Human Capital, and Economic Growth over the Demographic Transition [Fécondité, capital humain et croissance économique au cours de la transition démographique]," European Journal of Population, Springer;European Association for Population Studies, vol. 26(2), pages 159-182, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ruiwu Liu, 2025. "Health Investment, Environment, and Population Dynamics," Papers 2503.00391, arXiv.org, revised Aug 2026.
    2. Lee, Jong-Wha & Francisco, Ruth, 2012. "Human capital accumulation in emerging Asia, 1970–2030," Japan and the World Economy, Elsevier, vol. 24(2), pages 76-86.
    3. Prettner, Klaus & Bloom, David E. & Strulik, Holger, 2013. "Declining fertility and economic well-being: Do education and health ride to the rescue?," Labour Economics, Elsevier, vol. 22(C), pages 70-79.
    4. David E. Bloom & Michael Kuhn & Klaus Prettner, 2024. "Fertility in High-Income Countries: Trends, Patterns, Determinants, and Consequences," Annual Review of Economics, Annual Reviews, vol. 16(1), pages 159-184, August.
    5. Nick Parr & Ross Guest, 2014. "A method for socially evaluating the effects of long-run demographic paths on living standards," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 31(11), pages 275-318.
    6. David E. Bloom & Alex Khoury & Vadim Kufenko & Klaus Prettner, 2021. "Spurring Economic Growth through Human Development: Research Results and Guidance for Policymakers," Population and Development Review, The Population Council, Inc., vol. 47(2), pages 377-409, June.
    7. Bloom, David E. & Luca, Dara Lee, 2016. "The Global Demography of Aging: Facts, Explanations, Future," IZA Discussion Papers 10163, IZA Network @ LISER.
    8. David E. Bloom & David Canning & Günther Fink & Jocelyn E. Finlay, 2008. "The High Cost of Low Fertility in Europe," PGDA Working Papers 3208, Program on the Global Demography of Aging.
    9. Victor Leocádio & Ana Paula Verona & Simone Wajnman, 2025. "A review of research of the relationship between gender equity and fertility in low-fertility settings," Journal of Population Research, Springer, vol. 42(1), pages 1-26, March.
    10. Bloom, D.E. & Luca, D.L., 2016. "The Global Demography of Aging," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 3-56, Elsevier.
    11. Alberto Bucci & Lorenzo Carbonari & Monia Ranalli & Giovanni Trovato, 2019. "Health and Development," CEIS Research Paper 470, Tor Vergata University, CEIS, revised 24 Mar 2021.
    12. Okada, Keisuke, 2012. "The effects of female HIV/AIDS status on fertility and child health in Cambodia," Journal of Asian Economics, Elsevier, vol. 23(5), pages 560-570.
    13. Barbara S. Okun & Liat Raz‐Yurovich, 2019. "Housework, Gender Role Attitudes, and Couples' Fertility Intentions: Reconsidering Men's Roles in Gender Theories of Family Change," Population and Development Review, The Population Council, Inc., vol. 45(1), pages 169-196, March.
    14. Brian Piper, 2014. "Factor-Specific Productivity," Working Papers 1401, Sam Houston State University, Department of Economics and International Business.
    15. Jesús Crespo Cuaresma & Wolfgang Lutz & Warren Sanderson, 2014. "Is the Demographic Dividend an Education Dividend?," Demography, Springer;Population Association of America (PAA), vol. 51(1), pages 299-315, February.
    16. Peter Lorentzen & John McMillan & Romain Wacziarg, 2008. "Death and development," Journal of Economic Growth, Springer, vol. 13(2), pages 81-124, June.
    17. Bloom, David E. & Canning, David & Kotschy, Rainer & Prettner, Klaus & Schünemann, Johannes, 2024. "Health and economic growth: Reconciling the micro and macro evidence," World Development, Elsevier, vol. 178(C).
    18. Ariane Pailhé & Anne Solaz, 2012. "The influence of employment uncertainty on childbearing in France: A tempo or quantum effect?," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 26(1), pages 1-40.
    19. Arminen, Heli & Menegaki, Angeliki N., 2019. "Corruption, climate and the energy-environment-growth nexus," Energy Economics, Elsevier, vol. 80(C), pages 621-634.
    20. Nicoletta Balbo & Francesco C. Billari & Melinda Mills, 2013. "Fertility in Advanced Societies: A Review of Research," European Journal of Population, Springer;European Association for Population Studies, vol. 29(1), pages 1-38, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    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:arx:papers:2503.02237. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: https://arxiv.org/ .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.