Theories based on partial equilibrium reasoning alone cannot explain the widespread negative cross-sectional correlation between parental wages and fertility, without restrictive assumptions on preferences and childcare costs. We argue that incorporating a dynamic general equilibrium analysis of returns to human capital can help explain observed empirical patterns. Other by-products of this theory include explanations for intergenerational mobility without stochastic shocks, connections between mobility and fertility patterns, and locally determinate steady states. Comparative statics exercises on steady states shed light on the effects of education, childcare subsidies, child labor regulations, and income redistribution policy on long run living standards. (JEL H23, I31, J13, J24, J62, J82)
Mookherjee, Dilip, Silvia Prina, and Debraj Ray.
"A Theory of Occupational Choice with Endogenous Fertility."
American Economic Journal: Microeconomics,
Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Fertility; Family Planning; Child Care; Children; Youth
Human Capital; Skills; Occupational Choice; Labor Productivity
Job, Occupational, and Intergenerational Mobility; Promotion
Labor Standards: Labor Force Composition