Are Children Really Inferior Goods?: Evidence from Displacement-Driven Income Shocks

• Autores: Jason M. Lindo
• Localización: Journal of human resources, ISSN 0022-166X, Vol. 45, Nº 2, 2010, págs. 301-327
• Idioma: inglés
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• Resumen

  • Abstract:This paper explores the causal link between income and fertility by analyzing women's fertility response to the large and permanent income shock generated by a husband's job displacement. I find that the shock reduces total fertility, suggesting that the causal effect of income on fertility is positive. A model that incorporates the time cost of children and assortative matching of spouses can simultaneously explain this result and the negative cross-sectional relationship. I also find that a husband's displacement accelerates childbearing, which is consistent with lifecycle models of fertility in which the incentive to delay is driven by expected earnings growth.