Filoso, Valerio and Papagni, Erasmo (2010): Fertility Choice and Financial Development.
Download (264kB) | Preview
We study the consequences of broader access to credit and to capital markets on household's decisions over the number of children. In a life-cycle model of choice with forward and backward caring between parents and children, we analyze the effects of relaxing adults' borrowing constrains and broadening the opportunities for financial investment, and show how the sign of these effects depends on the role of children as a normal or inferior good in parents' preferences. We estimate the quantitative implications of our theoretical model on data from 145 countries over the period 1980--2006. Empirical results indicate that improved access to credit reduces fertility in poor countries and increases fertility in high-income countries. The effect of the development of capital markets on the number of children is negative in low-income countries and positive in the rich. When the analysis includes public pensions the main results remain the same. We also estimate the effect of the real interest rate, which proves significant and negative.
|Item Type:||MPRA Paper|
|Original Title:||Fertility Choice and Financial Development|
|Keywords:||Fertility, Financial Markets Development, Old-Age Security|
|Subjects:||G - Financial Economics > G1 - General Financial Markets
J - Labor and Demographic Economics > J1 - Demographic Economics > J13 - Fertility ; Family Planning ; Child Care ; Children ; Youth
D - Microeconomics > D1 - Household Behavior and Family Economics
|Depositing User:||Valerio Filoso|
|Date Deposited:||19. Oct 2010 10:01|
|Last Modified:||16. Feb 2013 02:41|
BECK, T., A. DEMIRGÜÇ-KUNT, AND R. LEVINE (2000): “A New Database on the Structure and Development of the Financial Sector,” The World Bank Economic Review, 14(3), 597–605.
BECK, T., A. DEMIRGÜÇ-KUNT, AND R. LEVINE (2004): Financial structure and economic growth: A cross-country comparison of banks, markets, and development. The MIT Press.
BECKER, G. S. (1960): “An economic analysis of fertility,” in Demographic and economic change in developed countries, ed. by R. Easterlin, vol. 11, pp. 209–231. Princeton University Press, Princeton
BECKER, G. S., AND H. LEWIS (1973): “On the Interaction between the Quantity and Quality of Children,” The Journal of Political Economy, 81(2), 279–288.
BOLDRIN, M., M. DE NARDI, AND L. JONES (2005): “Fertility and social security,” Working Paper 11146, National Bureau of Economic Research, Cambridge, MA.
CIGNO, A., AND F. C. ROSATI (1992): “The effects of financial markets and social security on saving and fertility behaviour in Italy,” Journal of Population Economics, 5(4), 319–341.
CIGNO, A., AND F. C. ROSATI (1996): “Jointly Determined Saving and Fertility Behaviour: Theory and Estimates for Germany, Italy, UK, and USA,” European Economic Review, 40(8), 1561–1589.
EHRLICH, I., AND J. KIM (2007): “Social security and demographic trends: Theory and evidence from the international experience,” Review of Economic Dynamics, 10(1), 55–77.
EHRLICH, I., AND F. LUI (1991): “Intergenerational trade, longevity, and economic growth,” Journal of Political Economy, 99(5), 1029–1059.
FEYRER, J., B. SACERDOTE, AND A. D. STERN (2008): “Will the stork return to Europe and Japan? Understanding fertility within developed nations,” Journal of Economic Perspectives, 22(3), 3–22.
HARVEY, R. (2004): “Comparison of household saving ratios: Euro area/United States/Japan,” Statistics Brief 8, Organisation for Economic Co-operation and Development (OECD).
HOTZ, J. V., J. KLERMAN, AND R. WILLIS (1997): “The economics of fertility in developed countries,” in Handbook of Population and Family Economics, ed. by M. R. Rosenzweig, and O. Stark, vol. 1a, chap. 3, pp. 275–347. Elsevier Science, Amsterdam.
JONES, L. E., A. SCHOONBROODT, AND M. TERTILT (2008): “Fertility theories: can they explain the negative fertility-income relationship?,” Working Paper 14266, National Bureau of Economic Research, Cambridge, MA.
JONES, L. E., AND M. TERTILT (2006): “An economic history of fertility in the US: 1826–1960,” Working Paper 12796, National Bureau of Economic Research, Cambridge, MA.
LAGERLÖF, N.-P. (1997): “Endogenous fertility and the old-age security hypothesis: A note,” Journal of Public Economics, 64(2), 279–286.
LEIBENSTEIN, H. (1957): Economic backwardness and economic growth: Studies in the theory of economic development. Wiley, New York, NY.
MCKINNON, R. I. (1973): Money and capital in economic development. The Brookings Institution, Washington, D.C.
NEHER, P. A. (1971): “Peasants, procreation, and pensions,” American Economic Review, 61(3), 380–389.
NISHIMURA, K., AND J. ZHANG (1992): “Pay-as-you-go public pensions with endogenous fertility.,” Journal of Public Economics, 48(2), 239.
PITT, M. M., S. R. KHANDKER, S. M. MCKERNAN, AND M. A. LATIF (1999): “Credit programs for the poor and reproductive behavior in low-income countries: are the reported causal relationships the result of heterogeneity bias?,” Demography, 36(1), 1–21.
POLLIN, R. (1997): “Financial intermediation and the variability of the saving constraint,” in The macroeconomics of saving, finance, and investment, ed. by R. Pollin, chap. 5, pp. 309–366. University of Michigan Press, Ann Arbor, MI.
RAZIN, A., AND E. SADKA (1995): Population Economics. The MIT Press, Cambridge, MA.
SCHULER, S. R., AND S. M. HASHEMI (1994): “Credit programs, women’s empowerment, and contraceptive use in rural Bangladesh,” Studies in Family Planning, 25(2), 65–76.
SCHULER, S. R., S. M. HASHEMI, AND A. P. RILEY (1997): “The influence of women’s changing roles and status in Bangladesh’s fertility transition: evidence from a study of credit programs and contraceptive use,” World Development, 25(4), 563–575.
SCHULTZ, T. P. (1997): “Demand for Children in Low Income Countries,” in Handbook of Population and Family Economics, ed. by M. R. Rosenzweig, and O. Stark, vol. 1a, chap. 8, pp. 349–430. Elsevier Science, Amsterdam.
SCHULTZ, T. W. (ed.) (1974): Economics of the family: Marriage, children, and human capital. University of Chicago Press, Chicago, IL.
SCOTESE LEHR, C. (1999): “Banking on fewer children: Financial intermediation, fertility and economic development,” Journal of Population Economics, 12(4), 567–590.
SHAW, E. (1973): Financial Deepening in Economic Development. Oxford University Press, Oxford, UK.
STEELE, F., S. AMIN, AND R. T. NAVED (2001): “Savings/Credit Group Formation and Change in Contraception,” Demography, 38(2), 267–282.
THE WORLD BANK (2007): “World Development Indicators,” .
WILLIS, R. J. (1973): “A new approach to the economic theory of fertility behavior,” The Journal of Political Economy, 81(2), 14–64.
WILLIS, R. J. (1980): “The old age security and population growth,” in Demographic behavior: Interdisciplinary perspectives on decision making, ed. by T. K. Burch. Westview Press, Boulder, CO.
Available Versions of this Item
- Fertility Choice and Financial Development. (deposited 19. Oct 2010 10:01) [Currently Displayed]