Are Children 'Normal'?
FRB of St. Louis Working Paper No. 2008-040E
46 Pages Posted: 3 Nov 2008 Last revised: 27 Mar 2011
Date Written: March 25, 2011
In his classic work on the economics of fertility, Becker (1960) suggests that children are likely “normal.” We examine this contention. Our first step is documenting an empirical regularity about the cross section of non-Hispanic white married couples in the U.S.: When we restrict comparisons to similarly-educated women living in similarly-expensive locations, completed fertility is positively correlated with the husband’s income. The empirical evidence is consistent with a simple model of household location and fertility choice, with children being “normal.” But this evidence does not settle issues of causality. In an effort to sort out causal effects, we undertake a rather specialized empirical exercise to analyze the localized impact on fertility of the mid 1970s increase in world energy prices—an exogenous shock that substantially increased men’s incomes in the Appalachian coal-mining region. Empirical evidence for that population indicates that fertility is increasing in men’s income.
Keywords: economics of fertility, location choice, Appalachian fertility
JEL Classification: J13, J40
Suggested Citation: Suggested Citation