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Optimal Fertility Decisions in a Life Cycle Model

  • Rees, Ray
  • Scholz, Sebastian
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    This model is the first to solve for the optimal timing of childbirth and number of children in a continuous time framework simultaneously. The model depicts how changes in wage at different stages of an individual’s life influence the timing decision of childbirth and the optimal number of children. When a woman wants to have more children, she decides to have them at a younger age. Medical research that extends the fecund life span induces women to have fewer children. A reduction of the parental leave due to daycare centers or a reduction in the costs of leave due to child benefits increase the number of children. Women value labour more, when they face the risk of an unknown divorce. This paper also shows that divorce does not change the timing of childbirth directly, it influences the number of children negatively and the reduced number of children delays the timing. The model can be used to predict upper bound fertility rates, when the expected divorce rate continues to increase.

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    File URL: http://epub.ub.uni-muenchen.de/11316/1/Optimal_Fertility_Decisions_in_a_Life_Cycle_Model.pdf
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    Paper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number 11316.

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    Date of creation: Jan 2010
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    Handle: RePEc:lmu:muenec:11316
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    1. James R. Walker, 1994. "The Effect of Public Policies on Recent Swedish Fertility Behavior," Labor and Demography 9410001, EconWPA.
    2. David de la Croix & Matthias Doepke, 2003. "Inequality and Growth: Why Differential Fertility Matters," American Economic Review, American Economic Association, vol. 93(4), pages 1091-1113, September.
    3. Bedard, Kelly & Deschenes, Olivier, 2003. "Sex Preferences, Marital Dissolution and the Economic Status of Women," University of California at Santa Barbara, Economics Working Paper Series qt07g2372x, Department of Economics, UC Santa Barbara.
    4. Heckman, James J & Walker, James R, 1990. "The Relationship between Wages and Income and the Timing and Spacing of Births: Evidence from Swedish Longitudinal Data," Econometrica, Econometric Society, vol. 58(6), pages 1411-41, November.
    5. Grossbard-Shechtman, Shoshana Amyra, 1984. "A Theory of Allocation of Time in Markets for Labour and Marriage," Economic Journal, Royal Economic Society, vol. 94(376), pages 863-82, December.
    6. Bloom, D.E. & Freeman, R.B. & Blackburn, M.L., 1991. "Fertility Timing, Wages, and Human Capital," Discussion Papers 1991_49, Columbia University, Department of Economics.
    7. Ward, Michael P & Butz, William P, 1980. "Completed Fertility and Its Timing," Journal of Political Economy, University of Chicago Press, vol. 88(5), pages 917-40, October.
    8. A. M. Spence, 1981. "The Learning Curve and Competition," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 49-70, Spring.
    9. Siv Gustafsson, 2001. "Optimal age at motherhood. Theoretical and empirical considerations on postponement of maternity in Europe," Journal of Population Economics, Springer, vol. 14(2), pages 225-247.
    10. repec:cup:cbooks:9780521887878 is not listed on IDEAS
    11. Rodrigo R. Soares, 2005. "Mortality Reductions, Educational Attainment, and Fertility Choice," American Economic Review, American Economic Association, vol. 95(3), pages 580-601, June.
    12. Patricia Apps & Ray Rees, 2004. "Fertility, Taxation and Family Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(4), pages 745-763, December.
    13. Browning, Martin, 1992. "Children and Household Economic Behavior," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1434-75, September.
    14. Hillman, Arye L & Long, Ngo Van, 1983. "Pricing and Depletion of an Exhaustible Resource When There Is Anticipation of Trade Disruption," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 215-33, May.
    15. repec:cup:cbooks:9780521716284 is not listed on IDEAS
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