Economics of Fertility - Economics of Gender - Lecture Slides, Slides of Economics

Download Economics of Fertility - Economics of Gender - Lecture Slides and more Slides Economics in PDF only on Docsity! Chapter 5 The Economics of Fertility • Fertility trends • Modeling fertility decisions • Evidence Docsity.com measuring fertility • birth rate – # births per 1000 population • fertility rate – # births per 1000 women, 15-44 Docsity.com Birth rate (per 1000 population) 10 15 20 25 30 35 1910 1930 1950 1970 1990 Docsity.com Total Fertility Rate 0 1 2 3 4 5 1900 1920 1940 1960 1980 2000 Docsity.com post WWII age cohorts • baby boom – 1946-64 • baby bust, “generation X” – 1965-1980 • echo boom, “generation Y” – 1980-1995 Docsity.com 6.98 6.15 4.52 2.91 2.07 1.61 1.38 0 1 2 3 4 5 6 7 Somalia Saudi Arabia Iraq India U.S. Canada Japan TFR of selected countries, 2003 Docsity.com • general world trend of declining fertility – below ZPG in much of Europe • fertility still very high in poorest countries Docsity.com An economic approach to fertility • preferences • production & cost • choice • comparative statics Docsity.com Production & cost • children require – stuff (Z) – time (T) • CS = F(T, Z) • note: the ratio of stuff/time varies with a child’s age Docsity.com • children are costly – cost of stuff (PZ) – cost of time • opportunity cost = lost wages • WM, WF • CCS=C(WM, WF,PZ) • note that – cost of CS = P of CS Docsity.com • so increases in prices, wages – increase cost/price of CS • how much? • depends on ability to substitute Docsity.com Comparative statics • changes in – income – prices – wages Docsity.com Change in Income • change in income NOT from wages • CS are normal goods – demand increases when income increases • income effect Docsity.com • so with increase in non-wage income, – increase demand for CS • both quantity and quality • (but mostly quality) Docsity.com (2) substitution effect – women are typically biggest time contributor to children – wage is opportunity cost of child rearing – so, as WF rises, so does cost of child rearing – increase in WF causes decrease in CS Docsity.com • note: – increase in WM would likely have a smaller substitution effect than with WF Docsity.com total effect of wage change • if substitution effect > income effect – CS falls • if substitution effect < income effect – CS rises Docsity.com • so as wages rise, – decrease quantity of children, • so cost of quality falls, • so increase the quality – increase quality of children • so cost of quantity rises • so decrease the quantity Docsity.com Why did fertility fall? • change in preferences? – possible, but hard to prove • change in women’s wages? – big increase since 1950 – decrease fertility if substitution effect dominates Docsity.com • change in men’s wages? – big increase in 20th century BUT – leveled off since 1970s • income effect to decrease CS Docsity.com