1. Economics of Gender Chapter 7 Assist.Prof.Dr.Meltem INCE YENILMEZ

2. The Economics of Fertility Demography: The study of population issues Fertility: Trends in conception (not the ability to conceive which is fecundity) Replacement rate: The fertility rate that results in population not growing or shrinking. – Replacement fertility rate = 2.1 in developed countries, 2.33 globally

4. Fertility Trends Over Time Fertility Rate (births per 1000 women): – Baby boom: 1945–1964 – Baby bust: big decline in the 1960s and early 1970s – Near stability since then Total Fertility Rate: – At peak of boom: 3.5 children – At bottom of bust: 1.7 children

6. Two Dimensions of Fertility Time-Series Variation Cross Section Variation Across Groups

7. Fertility-The Modern Economic Approach Becker (early 1960s): “An Economic Analysis of Fertility” Basic points of this model: – Most adults would like to have children; they get utility from their children – We can call this child services and assume that parents get utility from them – This has a quantity and quality dimension – Quality is the amount of resources spent on children (not a moral term) – Quantity is the number of children

8. Utility Maximization—Becker’s Model To maximize utility: U = u(CS, A) – CS = child services – A = adult good (all else but child services) Subject to: – CS = F(T, Z)=household production function – C cs = C(W m, W f, P z ) = P cs = price of child services function – Y f = (W m 3 T) + (W f X T) + V = full income constraint

9. Becker’s model (continued) Utility maximization implies that: MU cs (CS*)/P cs = MU A (A*)/P A From this we derive the demand for CS: CS* = D(P cs, (W m, W f, P Z,))

10. Choosing—The Economics of Fertility – Making New Choices: The Comparative Statics of the Demand for Child Services Example:  A woman’s wage This  the value of her time so  the cost of her spending time with the children and  paid work   child services demanded But also  ability to buy all goods including goods for children   children services demanded

11. Increase in women’s earnings causes two effects: – Children are more expensive, demand fewer of them – Full income has gone up, buy more of all normal goods including child services Child quality will likely increase – Negative effect of price increase smaller than the positive income effect Child quantity (fertility) will likely decrease – Negative effect of price increase is large for this relative to the income effect

12. Other Explanations for the Decline in Fertility Men’s wages Improved contraception The Relative Income Hypothesis: What matters is not absolute income but income relative to expectations Rising women’s labor force participation

13. Measuring Nonmarital Fertility Nonmarital fertility rate: The number of births to unmarried women divided by the number of unmarried women age 15 to 44 years Nonmarital birth ratio:The proportion of all births that are nonmarital. This is the ratio of nonmarital births to total births.

15. Causes and Explanations for Teen and Nonmarital Fertility The role of welfare benefits There are 3 approaches to testing for a positive relationship between welfare generosity and nonmarital fertility Comparing across states within a single time period (differences in fertility and welfare) Comparing over time: fertility time trend versus welfare generosity time trend Comparing across countries