The Economics of Fertility in Developed Countries

This paper surveys the intellectual development and empirical implications of the literature on the economics of fertility as it applies to fertility behavior in developed economies. The authors have two primary objectives: First, they seek to review the important theoretical developments, or model features, spawned by attempts to explain household fertility behavior within a neoclassical framework. In the process they characterize how the development of the theory of the allocation of time, the concepts of household production theory, and human capital investment theory, among others, helped improve understanding of the fertility decisions of households in developed societies. Second, the authors attempt to characterize the implications that these models provide for empirical assessments of the determinants of fertility behavior. As is true in many other subfields of economics, strategies for identifying the effects of relationships implied by neoclassical economic models of consumer choice, even those as straightforward as the effect of a price change on a household's demand for a good, are often controversial. Assessing the validity of implications of economic models of fertility is no exception to this pattern. The authors characterize the identification problems as they arise in this context and highlight several studies which, in the authors' opinion, follow exemplary strategies for obtaining estimates of causal relationships, especially with respect to their credibility. The paper begins with a survey of trends in fertility in the United States, proceeds to discussions of static and dynamic models of fertility behavior, and is followed by an analysis of econometric approaches and empirical findings about the determinants of fertility. Some directions for future research are mentioned in the conclusion.