Social externalities, endogenous childcare costs, and fertility choice

Ratbek Dzhumashev, Ainura Tursunalieva

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4 Citations (Scopus)

Abstract

We reconcile the steep decline in fertility rates during the demographic transition with the fertility rebound observed in recent decades in high-income countries. The micro-foundations of the optimal choice of agents in our expanded model include endogenous childcare costs and social externalities stemming from human capital, consumption, and fertility norms. Combining these factors with the quality-quantity trade-off in fertility choice explains the inverse J-shaped relationship between fertility and economic development. Moreover, the simulated average fertility rates based on the model are reasonably consistent with the observed pattern of the evolution of the cohort fertility rates in high-income countries. Sensitivity analyses show that the model fits historical cohort fertility rates only when it includes the effects of social externalities and endogenous childcare costs.

Original languageEnglish
Pages (from-to)397-429
Number of pages33
JournalJournal of Population Economics
Volume36
DOIs
Publication statusPublished - 2023

Keywords

  • Childcare costs
  • Demographic transition
  • Fertility rate
  • Fertility rebound
  • Social externalities

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