Working Paper BETA #2014-03

Download working-paper

Title : Endogenous fertility with a sibship size effect.

Author(s) : Elise S. Brezis, Rodolphe Dos Santos Ferreira

Abstract : Since the seminal work of Becker, the dynamics of endogenous fertility has been based on the trade-off faced by parents between the quantity and the quality of their children. However, in developing countries, when child labor is an indispensable source of household income, parents actually incur a negative cost for having an extra child, so that the trade-off disappears. The purpose of this paper is to restore the Beckerian quantity-quality trade-off in the case intergenerational transfers are upstream, so as to keep fertility endogenous. We do that by adding a negative “sibship size effect” on human capital formation to the standard Becker model. With a simple specification, we obtain multiplicity of steady states or, more fundamentally, the possibility of a jump from a state with high fertility and low income to a state with low fertility and high income, triggered by a continuous increase in the productivity of human capital formation.

Key-words : Endogenous fertility; Intergenerational transfers; Human capital formation; Demographic transition

JEL Classification : E24, J13