A Theory of Occupational Choice with Endogenous Fertility
Posted: 21 May 2011
Date Written: November 1, 2010
By incorporating occupational choice into a theory of endogenous fertility, this paper provides an explanation of observed patterns linking parental incomes to fertility. Our approach does not rely on assumptions concerning the relative strength of substitution and wealth effects in parental preferences. While arguing that the wage-fertility relationship is generally negative, the results imply exceptions in developing countries or within particular occupational segments in developed countries. Moreover, steady state mobility arises without stochastic shocks, and steady states are locally determinate. Comparative statics exercises on steady states shed light on policy questions such as income redistribution and family planning subsidies.
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