Forecasting Aggregate Period Specific Birth Rates: The Time Series Properties of a Microdynamic Neoclassical Model of Fertility

This article demonstrates the value of microdata for understanding the effect of wages on life cycle fertility dynamics. Conventional estimates of neoclassical economic fertility models obtained from linear aggregate time series regressions are widely criticized for being nonrobust when adjusted for serial correlation. Moreover, the forecasting power of these aggregative neoclassical models has been shown to be inferior when compared with conventional time series models that assign no role to wages. This article demonstrates, that when neoclassical models of fertility are estimated on microdata using methods that incorporate key demographic restrictions and when they are properly aggregated, they have considerable forecasting power.