Economic approaches to modeling fertility determinants : a selective review

The author reviews critical models of fertility in which the fertility decision is regarded as the outcome of economic choice behavior. He considers, separately, two classes of models. The first are static lifetime fertility models that explain lifetime fertility aggregates and are exemplified by the work of Easterlin-Crimmins (1983), Rosenweig and Schultz (1985), and Montgomery (1987). The second are dynamic stochastic fertility models that have been used to analyze intertemporal or intergenerational decisions on birth-timing and birth-spacing. These are represented by the work of Wolpin (1984), Newman (1988), and the macroeconomic model of Barro and Becker (1989). The author discusses issues concerning the theoretical specifications and the econometric implementation of these models. With respect to the choice of modeling paradigm, he notes that static lifetime choice models, while relatively easy to implement, are restrictive in scope. The lifetime decision framework abstracts from the sequential nature of the fertility decision and cannot therefore adequately address how changes in the time profile of costs of contraception, wages, incomes, mother's education, or mortality risks affect fertility variables. Static models also cannot explain stylized empirical regularities with time dimensions, such as convergence of fertility rates across countries, the tendency for women to space births as their number of children increases, or the countercyclicality of U.S. fertility to the business cycle. The author recommends that for the most complete treatment of fertility issues, the analyst should adopt a dynamic-stochastic view of the fertility decision.