Childbearing Postponement, its Option Value, and the Biological Clock

48 Pages Posted: 23 Apr 2018

See all articles by David de la Croix

David de la Croix

Catholic University of Louvain (UCL) - Institut de Recherches Economiques et Sociales (IRES); Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Aude Pommeret

Université de Savoie

Date Written: April 2018

Abstract

Having children is like investing in a risky project. Postponing birth is like delaying an irreversible investment. It has an option value, which depends on its costs and benefits, and in particular on the additional risks motherhood brings. We develop a parsimonious theory of childbearing postponement along these lines. We derive its implications for asset accumulation, income, optimal age at first birth, and childlessness. The structural parameters are estimated by matching the predictions of the model to data from the National Longitudinal Survey of Youth NLSY79. The uncertainty surrounding income growth is shown to increase with childbearing, and this increase is stronger for more educated people. This effect alone can explain why the age at first birth and the childlessness rate both increase with education. We use the model to simulate two hypothetical policies. Providing free medically assisted reproduction technology does not affect the age at first birth much, but lowers the childlessness rate. Insuring mothers against income risk is powerful in lowering the age at first birth.

Keywords: Assisted reproduction technology, Career uncertainty, Late parenthood, Real option

JEL Classification: D91, J13

Suggested Citation

de la Croix, David and Pommeret, Aude, Childbearing Postponement, its Option Value, and the Biological Clock (April 2018). CEPR Discussion Paper No. DP12884. Available at SSRN: https://ssrn.com/abstract=3167249

David De la Croix (Contact Author)

Catholic University of Louvain (UCL) - Institut de Recherches Economiques et Sociales (IRES) ( email )

3, Place Montesquieu
Louvain-la-Neuve, 1348
Belgium
+32 10 47 3945 (Fax)

HOME PAGE: http://www.de-la-croix.be

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

Aude Pommeret

Université de Savoie ( email )

27 Rue Marcoz
Chambéry, 73011
France

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