Life-Cycle Fertility: Means vs. Motives vs. Opportunities

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Money Macro Seminar
University of Pennsylvania

3718 Locust Walk
395 McNeil

Philadelphia, PA

United States

In this paper I study life-cycle fertility patterns and the cross sectional distribution of births in the U.S. I focus my attention on the fact that more educated individuals have
fewer children and have them later in life than their less educated counterparts. To understand the data, I propose a theory in which a standard model of fertility is embedded into a realistic life-cycle, consumption-savings framework with imperfect capital markets and stochastic fertility. My approach then tries to assess whether standard theories
of fertility can accommodate cross-sectional and life-cycle variation in the data. I show that fertility risk has a first order effect on the level and the timing of births.
By fertility risk I mean both: (i) early in life, women with different educational attainments have different levels of success when carrying out childbearing plans and (ii) biological constraints affect fertility decisions later in life. I estimate the extent of these risks using individual data on abortions and unplanned pregnancies. From the exercise, I conclude that standard theories used in macroeconomics to understand the time-series dimension of the data (e.g., the demographic transition) don’t impose
enough structure to account for cross-sectional variation nor life-cycle fertility facts. Thus, my model reassesses the usefulness of such theories and extends them by introducing imperfect control of stochastic fertility.

For more information, contact Dirk Krueger.

Sekyu Choi

Grad Student

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