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Income Composition, Endogenous Fertility and Schooling Investments in Children

  • Fernando A. Veloso

    (University of Chicago)

This paper studies how the composition of income between mothers and fathers affects fertility and schooling investments in children, using data from the 1976 and 1996 PNAD, a Brazilian household survey. Income composition affects the time cost of fertility because mothers and fathers allocate different amounts of time to child-rearing. These effects are in turn transmitted to investments in children through a tradeoff between quantity and quality of children. The main contribution of this paper is twofold. First, it derives new implications about the relationship between household income composition and schooling investments in children. Second, this paper devises and implements an empirical approach to assess these implications, using two cross-sections of fertility and schooling data from Brazil. The main empirical findings of the paper can be summarized as follows. First, the empirical analysis shows that a larger negative effect of the mother's labor income on fertility in 1996 is associated with a larger positive effect on the adult child's schooling, reflecting the interaction between quantity and quality of children. Second, the larger negative effect of the mother's labor income on fertility in 1996 is associated with a reduction in the effect of other determinants of number of children. This suggests that an increase in the relative importance of time costs of fertility may be an important determinant of variations in fertility over time in Brazil and other developing countries.

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Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1282.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:1282
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  1. Behrman, Jere R & Taubman, Paul, 1990. "The Intergenerational Correlation between Children's Adult Earnings and Their Parents' Income: Result from the Michigan Panel Survey of Income Dynamics," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 36(2), pages 115-27, June.
  2. Lam, David & Levison, Deborah, 1991. "Declining inequality in schooling in Brazil and its effects on inequality in earnings," Journal of Development Economics, Elsevier, vol. 37(1-2), pages 199-225, November.
  3. Robert T. Michael, 1974. "Education and the Derived Demand for Children," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 120-159 National Bureau of Economic Research, Inc.
  4. Banerjee, Abhijit V & Newman, Andrew F, 1991. "Risk-Bearing and the Theory of Income Distribution," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 211-35, April.
  5. Becker, Gary S & Tomes, Nigel, 1986. "Human Capital and the Rise and Fall of Families," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages S1-39, July.
  6. Galor, Oded & Zeira, Joseph, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 35-52, January.
  7. Michael Kremer & Daniel Chen, 2000. "Income-distribution Dynamics with Endogenous Fertility," NBER Working Papers 7530, National Bureau of Economic Research, Inc.
  8. Lam, David & Schoeni, Robert F, 1993. "Effects of Family Background on Earnings and Returns to Schooling: Evidence from Brazil," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 710-40, August.
  9. Ben-Porath, Yoram, 1973. "Economic Analysis of Fertility in Israel: Point and Counterpoint," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages S202-33, Part II, .
  10. Gary S. Becker & Robert J. Barro, . "A Reformulation of the Economic Theory of Fertility," University of Chicago - Population Research Center 85-11, Chicago - Population Research Center.
  11. Willis, Robert J, 1973. "A New Approach to the Economic Theory of Fertility Behavior," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages S14-64, Part II, .
  12. Song Han & Casey B. Mulligan, . "Human Capital, Heterogeneity, and the Estimation of Degrees of Intergenerational Mobility," University of Chicago - Population Research Center 97-3, Chicago - Population Research Center.
  13. Becker, Gary S & Tomes, Nigel, 1976. "Child Endowments and the Quantity and Quality of Children," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S143-62, August.
  14. Birdsall, Nancy, 1988. "Economic approaches to population growth," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 12, pages 477-542 Elsevier.
  15. Lam, David, 1986. "The Dynamics of Population Growth, Differential Fertility, and Inequality," American Economic Review, American Economic Association, vol. 76(5), pages 1103-16, December.
  16. Schultz, Theodore W., 1979. "The Economics of Being Poor," Nobel Prize in Economics documents 1979-1, Nobel Prize Committee.
  17. 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 S279-88, Part II, .
  18. Theodore W. Schultz, 1974. "Fertility and Economic Values," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 3-22 National Bureau of Economic Research, Inc.
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