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Fertility and Financial Development: Evidence from U.S. Counties in the 19th Century

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  • Alberto Basso
  • Howard Bodenhorn
  • David Cuberes

Abstract

The old-age security hypothesis establishes that one important reason why parents have a large offspring is to ensure that they will receive financial support from them in old age. In this paper we use data on fertility and financial development in 19th century U.S. to indirectly test this theory. In particular, we explore whether more developed local financial markets reduce the incentives for families to have a large offspring. After controlling for several factors likely to create cross-county variation in fertility levels and for potential spatial correlation, we find that the presence of a bank and the degree of financial development in a given county are strongly associated with lower children-to-women ratios. We find compelling evidence for the old-age security hypothesis.

Suggested Citation

  • Alberto Basso & Howard Bodenhorn & David Cuberes, 2014. "Fertility and Financial Development: Evidence from U.S. Counties in the 19th Century," NBER Working Papers 20491, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:20491
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    2. Tao Li, 2016. "Spousal Age Gap and Fertility Preferences within a Family," Economics Bulletin, AccessEcon, vol. 36(2), pages 970-975.

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    More about this item

    JEL classification:

    • N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913
    • N31 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: Pre-1913
    • N91 - Economic History - - Regional and Urban History - - - U.S.; Canada: Pre-1913
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis

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