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Re-Visiting the Easterlin Hypothesis: U.S. Fertility 1968-2010

Author

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  • Macunovich, Diane J.

    () (University of Redlands)

Abstract

This study tests the effect of relative income – younger people's earning potential relative to their aspirations, as approximated by older families' income – on two measures of fertility: the proportion of women with an own child under one year of age, and the proportion of women with at least one own child under eighteen. The results are highly supportive of the Easterlin relative income hypothesis, finding a dominant negative effect of older family income that extends due to postponement effects even into groups 11-15 years out of school. Increases in older family income are found to account for 42% of the decline in the proportion of women with a newborn, and 37% of the decline in the proportion with at least one own child, among women 0-5 years out of school. In addition, the study finds a strong but changing effect of the female wage: positive among women 0-5 years out of school, although slowly declining over time, but negative among the older women with a dominant positive time trend that has produced a positive effect in the last decade. It is hypothesized that the observed pattern of increases in fertility among women with higher levels of education over the last decade has been a function of this emerging positive effect of the female wage, among older more educated women.

Suggested Citation

  • Macunovich, Diane J., 2011. "Re-Visiting the Easterlin Hypothesis: U.S. Fertility 1968-2010," IZA Discussion Papers 5885, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp5885
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    References listed on IDEAS

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    1. Jeon, Yongil & Shields, Michael P., 2008. "The Impact of Relative Cohort Size on U.S. Fertility, 1913-2001," IZA Discussion Papers 3587, Institute for the Study of Labor (IZA).
    2. Diane J. Macunovich, 1998. "Fertility and the Easterlin hypothesis: An assessment of the literature," Journal of Population Economics, Springer;European Society for Population Economics, vol. 11(1), pages 53-111.
    3. Brigitte Waldorf & Rachel Franklin, 2002. "Spatial Dimensions of the Easterlin Hypothesis: Fertility Variations in Italy," Journal of Regional Science, Wiley Blackwell, vol. 42(3), pages 549-578.
    4. Welch, Finis, 1979. "Effects of Cohort Size on Earnings: The Baby Boom Babies' Financial Bust," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 65-97, October.
    5. Sevilla, Jaypee, 2007. "Fertility and relative cohort size," Arbetsrapport 2007:11, Institute for Futures Studies.
    6. Olsen, Randall J, 1994. "Fertility and the Size of the U.S. Labor Force," Journal of Economic Literature, American Economic Association, vol. 32(1), pages 60-100, March.
    7. Finis Welch, 1979. "Effects of Cohort Size on Earnings: The Baby Boom Babies' Financial Bust," UCLA Economics Working Papers 146, UCLA Department of Economics.
    8. Yongil Jeon & Michael P. Shields, 2005. "The Easterlin hypothesis in the recent experience of higher-income OECD countries: A panel-data approach," Journal of Population Economics, Springer;European Society for Population Economics, vol. 18(1), pages 1-13, August.
    9. Macunovich, Diane J., 1998. "Race and relative income/price of time effects on U.S. fertility," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 27(3), pages 365-400.
    10. Robert McNown & Sameer Rajbhandary, 2003. "Time series analysis of fertility and female labor market behavior," Journal of Population Economics, Springer;European Society for Population Economics, vol. 16(3), pages 501-523, August.
    11. Francine D. Blau & Lawrence M. Kahn, 2007. "Changes in the Labor Supply Behavior of Married Women: 1980–2000," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 393-438.
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    More about this item

    Keywords

    fertility; relative income; relative cohort size; Easterlin hypothesis;

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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