The Value of Time, the Price of Leisure, and the Fertility Decline. Cross-Country Measurement and Evidence

Two economic accounts of the rich world’s fertility decline point at different prices. In one, the time children require has grown more expensive as women’s wages rose and services became dear. In the other, the alternatives to raising children have grown cheaper as recreation, and lately digital entertainment, fell in price. This paper builds the data needed to tell these stories apart and tests them against each other. This paper assembles a panel of female/male hourly wage ratios covering 56 countries, some back to 1965, computed from Luxembourg Income Study microdata and validates it against two independent sources. Within countries, cohorts of women who faced higher relative wages and a more serviceintensive economy during their childbearing years completed significantly fewer births, with the shortfall concentrated in one-child families, and the same data reproduce and explain the long-standing puzzle that the cross-country correlation runs the other way. The price of leisure (and the expansion of mobile broadband) matters only for births to women under twenty. The evidence supports the view that the fertility decline is, in large part, the price of time rising with development and transition to a service economy.