Academic journal article Demographic Research

Children Are Costly, but Raising Them May Pay: The Economic Approach to Fertility

Academic journal article Demographic Research

Children Are Costly, but Raising Them May Pay: The Economic Approach to Fertility

Article excerpt

1. Introduction

Population trends and their economic consequences have long been studied by economists, e.g. by Adam Smith (1776: ch. I.viii), Robert Malthus (1803), or John Maynard Keynes (1937). However, attempts at systematically explaining these macro- level trends through economic analyses - based, among other things, on a micro- economic theory of parental fertility choices - are a much more recent phenomenon. What is currently considered to be "the" economic theory of fertility can largely be taken to be a strand of literature inaugurated through a seminal contribution by Becker (1960). Over time, the research programme covered in this literature has grown substantially, not only through a multitude of extensions and adaptations brought forth by Becker and his followers (see, e.g., the contributions collected in Becker 1981, 1991), but also through the integration of alternative ideas developed by a number of independent researchers and critics (probably the most important being Easterlin 1969; Pollak 1985; Rosenzweig and Schultz 1985; or Cigno 1993).

Economists were thus rather late in entering the field of fertility research. Also, when applying their analytical tools to this issue, they tended to ignore most of what other social scientists had done in this area beforehand, potentially offering a first-rate example of what is sometimes called "economic imperialism". As Leibenstein (1974: 458) put it,

"to some of those who had been laboring in the vineyards of demography for decades, the efforts of economists in the sixties and seventies to develop a theory of fertility must have appeared like the invasion of a horde of primitives on a technologically advanced community proclaiming loudly their intent to reinvent the wheel."

Ironically, this objection was raised by one of the few economists who had been working on fertility even earlier (cf. Leibenstein 1957). Leibenstein's substantive criticisms were that the new economic theory of fertility was formally rather complex, but at the same time far too rough regarding many details of real-world fertility behaviour to be of any practical value for applied research on this issue, beyond the mere replication of well-known results. Since those early days much of this has clearly improved through more specific research questions, a stronger empirical orientation, and access to better data. Still, Leibenstein may have a fundamental point about the prominent role of modelling strategies, at the expense of empirical richness, which still applies to economic analyses compared to fertility research in other disciplines.

Providing a full-scale survey of the history and current stance of economic fertility theory would be clearly beyond the scope of this article. 2 Rather, it is meant to introduce researchers from other fields to basic features of this particular approach, highlighting potential merits as well as weaknesses (Section 2); to point to developments which appear to be particularly important for current research on fertility done by economists (Section 3); and to make suggestions for an agenda for future research which could become increasingly interdisciplinary in its nature (Section 4). Section 5 concludes the article.

Before going into detail, it is important to note that the economic theory of fertility does not provide a particular explanation for why people may want to have children. Nor does it necessarily yield a consistent set of results when addressing important sub- issues such as the desirable number, timing and spacing of births, that is, how many children parents may wish to have, at what stage of their life cycles, at which intervals, etc. Rather, economic theory provides a generic, but distinct approach to analysing relevant motives and outcomes. It rests on a uniform paradigm with potentially differing specifications which can be brought to bearing on various dimensions and aspects of actual fertility behaviour.

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