Publication Date

2009-10-20

Availability

Open access

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PHD)

Department

Economics (Business)

Date of Defense

2009-08-24

First Committee Member

Luis Locay - Committee Chair

Second Committee Member

David Kelly - Committee Member

Third Committee Member

Manuel Santos - Committee Member

Fourth Committee Member

Pedro Gomis-Porqueras - Outside Committee Member

Abstract

The economic literature has found difficulty linking fertility and mortality rates. Previous versions of the dynastic (parental altruism) model have failed to predict the negative relationship between fertility and infant survival, since it was postulated that parents view children as normal goods and increases in childhood survival would result in a decrease in unit-child costs. In this work, I find that a simple reformulation of the Becker-Barro altruism hypothesis successfully predicts the observed demographic transition in the past century, as well as explaining fertility differences across countries. I contest that fertility decision is dependent on the number of surviving children and not the number of children born. Child bearing is therefore perceived as risk-taking behavior given the stochastic nature of childhood survival. Essentially, higher childhood survival requires fewer children (i.e., less "hoarding") in order to ensure the desired family size. The model predicts that higher childhood survival rates will lead to a decrease in fertility. I calibrate an infinitely-lived overlapping-generations dynastic utility model and compare the fertility predictions of the baseline model with the data for the year 2000. In doing so, I have relaxed the dual normalization of the utility of death and the overall level of utility. This is necessary given that the value of children's lives are important in the parent's fertility decision. Parents jointly care for the number and utility levels of their children. I will calibrate this number and estimate this implied value of life. I find that the consumption level an agent is indifferent between life and death to be less than 1% of current consumption. I also find that parents care for their children future 47% more than that of their own. All in all, this experiment finds that fertility differences cannot be explain by differences in mortality rates alone and that incorporating human capital investment in the household production function will yield desirable results. Simply stated, lower income countries have lower opportunity costs of birthing children and will choose quantity over quality. I find that the steady state analysis of this model can explain over 62% of the cross-country variation, while mortality rates alone can explain 10%-25%. The model generally performs better for low survival, high fertility countries and vice versa. While the model tends to perform well for these economies, more needs to be done to explain fertility in the transition economies.

Keywords

Fertility; Demography; Mortality; Growth

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