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Children as Family Public Goods: Some Implications for Fertility

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Author Info
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.

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Paper provided by School of Economics, The University of New South Wales in its series Discussion Papers with number 2009-04.

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Length: 41 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:swe:wpaper:2009-04

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Related research
Keywords: Family bargaining; Fertility; Child subsidies; Labor Participation Rate;

Find related papers by 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
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Cigno, Alessandro & Luporini, Annalisa & Pettini, Anna, 2003. "Transfers to families with children as a principal-agent problem," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 1165-1177, May. [Downloadable!] (restricted)
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  2. Mukesh Eswaran, 2002. "The empowerment of women, fertility, and child mortality: Towards a theoretical analysis," Journal of Population Economics, Springer, vol. 15(3), pages 433-454. [Downloadable!] (restricted)
  3. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April. [Downloadable!] (restricted)
  4. Betsey Stevenson, 2007. "The Impact of Divorce Laws on Marriage-Specific Capital," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 75-94. [Downloadable!]
    Other versions:
  5. David Card & John E. DiNardo, 2002. "Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 733-783, October. [Downloadable!]
    Other versions:
  6. Philip A. Trostel, 2004. "Returns to scale in producing human capital from schooling," Oxford Economic Papers, Oxford University Press, vol. 56(3), pages 461-484, July. [Downloadable!] (restricted)
  7. Pollak, Robert A, 1985. "A Transaction Cost Approach to Families and Households," Journal of Economic Literature, American Economic Association, vol. 23(2), pages 581-608, June. [Downloadable!] (restricted)
  8. Iyigun, Murat & Walsh, Randall P., 2007. "Endogenous gender power, household labor supply and the demographic transition," Journal of Development Economics, Elsevier, vol. 82(1), pages 138-155, January. [Downloadable!] (restricted)
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