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An Analysis of Women's Fertility and Labor Supply: Implications for Family Policies

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  • Cho, Yoonyoung

Abstract

A drastic decline in fertility rates in Korea is accelerating the unprecedentedly rapid population ageing. This phenomenon calls into question what role the economic forces play in the decisions and which public policies can be effective. As population ageing induces a shortage of labor force that sustain the economic growth, this paper notes that stimulating women's labor supply as well as encouraging fertility is a very important policy goal in an ageing society. Having this in mind, I investigate the effectiveness of family policies that are frequently used in developed countries. For this purpose, I first analyze the dynamic decisions of fertility and labor supply in a lifecycle framework, where time costs associated with children, time and goods investment in children, and uncertainties in earnings are important determinants of women's decisions. Based on the model, I then conduct policy experiments which evaluate the effects of policies including child allowances, conditional childcare subsidies, pronatal income tax, and maternal leaves. The findings show that providing benefits conditional on or through labor market activities are more effective than the provision of unconditional transfer in encouraging fertility without reducing labor supply of women.

Suggested Citation

  • Cho, Yoonyoung, 2006. "An Analysis of Women's Fertility and Labor Supply: Implications for Family Policies," Discussion Paper 290, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:piedp2:290
    Note: International Conference on Declining Fertility in East and Southeast Asian Countries, November 2006
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    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/14134/pie_dp290.pdf
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    References listed on IDEAS

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    1. Richard Blundell & Alan Duncan & Julian McCrae & Costas Meghir, 2000. "The labour market impact of the working families’ tax credit," Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 75-103, March.
    2. Yoram Ben-Porath & Finis Welch, 1976. "Do Sex Preferences Really Matter?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 90(2), pages 285-307.
    3. Michael Baker & Jonathan Gruber & Kevin Milligan, 2008. "Universal Child Care, Maternal Labor Supply, and Family Well-Being," Journal of Political Economy, University of Chicago Press, vol. 116(4), pages 709-745, August.
    4. Angrist, Joshua D & Evans, William N, 1998. "Children and Their Parents' Labor Supply: Evidence from Exogenous Variation in Family Size," American Economic Review, American Economic Association, vol. 88(3), pages 450-477, June.
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    Cited by:

    1. Cho, Yoonyoung, 2008. "An Evaluation of A Pronatal Subsidy Program in Korea: A Quasi-Experimental Approach," MPRA Paper 25958, University Library of Munich, Germany.

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    More about this item

    Keywords

    Labor supply; fertility; childcare; subsidies;
    All these keywords.

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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