Baby Busts and Baby Booms: The Fertility Response to Shocks in Dynastic Models

by Larry E. Jones and Alice Schoonbroodt
 
Latest version: January 2014, Submitting soon

Abstract

Economic demographers have long analyzed fertility cycles. This paper builds a foundation for these cycles in a model of fertility choice with dynastic altruism, age- structured population and aggregate productivity shocks. It is shown that under reasonable parameter values, fertility is pro-cyclical and that, following a shock, fertility continues to cycle endogenously as subsequent cohorts leave the labor force. Applied to the U.S. experience in the 20th century, in the model, the Great Depression generates a baby bust of 55% of that seen in the U.S. in the 1930s which is followed by a baby boom of 72% of that seen in the U.S. in the 1950s. The theory predicts that cohort size and intergenerational transfers per recipient are inversely related which is supported by evidence from estate data. Statistical analysis across countries in the 1930s and 1950s and across U.S. states in the most recent recession further supports our theory. 


Links:    [Paper]       [Slides]       [Supplementary Appendix]       (NBER WP w16596)
                (Earlier version: Univ. of Southampton, Discussion Papers in Economics and Econometrics, DP 0706)
 
Bibtex: 

@techreport{Jones-Schoonbroodt-2014,
  author = {Larry E. Jones and Alice Schoonbroodt},
  title = {Baby Busts and Baby Booms: The Fertility Response to Shocks in Dynastic Models},
  year = {2014}
  note = {available at https://sites.google.com/site/aliceschoonbroodt/research/baby-busts-and-baby-booms}
}