Title

Are children really inferior goods? Evidence from displacement-driven income shocks

RIS ID

84933

Publication Details

Lindo, J. M. (2010). Are children really inferior goods? Evidence from displacement-driven income shocks. Journal of Human Resources: education, manpower and welfare economics, 45 (2), 301-327.

Abstract

This paper explores the causal link between income and fertility by analyzing women's fertility response to the large and permanent income shock generated by a husband's job displacement. I find that the shock reduces total fertility, suggesting that the causal effect of income on fertility is positive. A model that incorporates the time cost of children and assortative matching of spouses can simultaneously explain this result and the negative cross-sectional relationship. I also find that a husband's displacement accelerates childbearing, which is consistent with lifecycle models of fertility in which the incentive to delay is driven by expected earnings growth.

Link to publisher version (URL)

Journal of Human Resources

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