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Children as Family Public Goods: Some Implications for Fertility

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  • Miriam Steurer

    (School of Economics, The University of New South Wales)

Abstract

A two-stage bargaining model is developed to describe how fertility decisions are made in a strategic family setting. Given the assumption that family contracts are incomplete and cannot be used to enforce optimal behavior, it is shown that investments in children (i.e. the fertility rate) may be sub-optimal. This is because the woman may find it in her interest to invest too little in children in stage 1 of the model in order to protect her bargaining status in stage 2. I then consider in the context of this model the impact on fertility rates of changes in child custody rules (in the case of divorce), the wage rate, and the male-female wage differential. I conclude by exploring how the introduction of child subsidies can change the results.

Suggested Citation

  • Miriam Steurer, 2009. "Children as Family Public Goods: Some Implications for Fertility," Discussion Papers 2009-04, School of Economics, The University of New South Wales.
    • Handle: RePEc:swe:wpaper:2009-04
    as

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    File URL: http://research.economics.unsw.edu.au/RePEc/papers/2009-04.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Family bargaining; Fertility; Child subsidies; Labor Participation Rate;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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