Transcript Economics of Fertility

Economics of
Fertility
Chapter 5
Part I
Economics of Fertility

1960s about 4 million births in the US
– Nearly 1 out of every 8 women gave birth
between the ages of 15 and 44
– Nearly 1 in 4 between the ages of 20 to
24

In 2000 there was about 4 million
births in the US
– But only 1 our of every 16 in the 15 to 44
Economics of Fertility
Was introduced by Malthus to economics
and his basic tenet was that
Population grows at a geometric rate, food
production grew at an arithmetic rate
Population
Food
Growth rate

Time
Ways in Which to Deal With
Population Explosion

Positive Checks
– War
– Famine
– Pestilence

Preventive Checks
– Moral Restraint
– Contraception
– Abortion
Fertility in Modern
Economics

Once again,
– Gary Becker

Demography
– Study of population
Terms

Birth Rate
– Number of births in a year (or given
period) devided by the total population
– In 2001, 4.03 million births
– 285 million people
births
4.03m illion
Birth Rate2001 

1.41%
Total population 285m illion
Birth Rate
Normally based on 1,000 people
 Hence, birth rate for the U.S. in 2001
was
 14.1 per 1000 population
 The per 1000 can be skipped since it
is generally understood to be such

Natural Rate of
Population

The natural rate of population is
defined as:
– Birth rate – Death Rate
– Where death rate is constructed similar to
birth rate
Birth Rate vs. Fertility Rate
Birth Rate is based on whole
population
 Fertility rate is based on at-risk
population
 Thus, fertility rate can be constructed
based on women age 15 to 44.

Fertility Rate
In 2001 the fertility rate in the U.S. was
65.3 per 1000
 An approximation can be obtained by

– Multiply by 2 the birth rate
 14.1
X 2 = 28.1 (account for about 50%
being male)
 28.1 X 2.3 = 64.63 (for about little more than
50% of the population of female population
being under 15 or older than 44
Fertility Rate
Age specific
 Non-marital fertility rates
 Sub groups:

– By race
– Ethnicity
– etc
Total Fertility Rate

Total Fertility Rate (TFR)
TFR = 5 (FR10-14 + FR15-19 + FR20-24 +…
+ FR45-49)


In 2001 in the US the TFR was 2.034
Zero Population Growth
Zero Population Growth (ZPG)
 ZPG is obtained when TFR = 2.13
 This is because 50% births are male
 And some women either die or do not
have children, hence TFR > 2
 In the US ZPG < 0

MEASURES OF US FERTILITY,
2001
TERM
DEFINITION AND FORMULA
VALUE
-
4.03MILLIONS
BIRTHS PER 1000 POP =
(BIRTHS/POP) * 1000
14.1
BIRTHS PER 1000 WOMEN,
AGE 15-44 =
(BIRTHS/NUM. OF WOMEN,
AGE 15-44) * 1000
65.3
NONMARITAL FERTILITY
RATE
BIRTHS PER 1000 UNMARRIED
WOMEN, AGE 15-44 =
(BIRTHS TO UNMARRIED
WOMEN/ NUM. UNMARRIED
WOMEN, AGE 15-44) * 1000
43.8
TOTAL FERTILITY RATE
NUMBER OF LIFETIME
BIRTHS TO 1000 WOMEN IF
THEY HAD CURRENT AGESPECIFIC FERTILITY RATES
2034
NUMBER OF BIRTHS
BIRTH RATE
FERTILITY RATE
Baby Boom vs. Baby Bust
US FERTILITY RATE AND TOTAL BIRTHS, 1940-2001
5
150
4
100
3
50
2
1940
1960
1980
2000
FERTILITY
RATE (LEFT
SCALE)
TOTAL BIRTHS
(MILLIONS
(BIRTHS/1000 WOMEN)
200
# BIRTHS
(RIGHT SCALE)
US FERTILITY RATE BY RACE AND
ETHNICITY, 2001
96
HISPANIC
67.2
BLACK
65
WHITE
ASIAN-PACIFIC
ISLANDER
64.2
NATIVE
AMERICAN
58.1
0
20
40
60
80
BIRTHS PER 1000 WOMEN, AGE 15-44
100
BIRTHS PER WOMAN, SELECTED EUROPEAN COUNTRIES,
1970 AND 1995
1970
1995
AUSTIRA
2.3
1.4
FRANCE
2.5
1.7
GERMANY
2.0
1.3
ITALY
2.4
1.3
PORTUGAL
2.8
1.4
RUSSIAN
FERDERATION
2.0
1.4
SWEDEN
1.9
1.7
UNITED KINGDOM
2.4
1.7
Fertility
Modern Economic Approach

Preferences
– Demand for Child Services
 Quantity
 Quality
U = U (CS, A)
where A are all other goods
Fertility
Modern Economic Approach
Production
 Child Services production function

– CS = F(T,Z)
– Where T is the Time involved and
– Z the cost of purchasing things for them
Fertility
Modern Economic Approach

COST
– Opportunity Cost
 CCS

= C( WM, WF, PZ )
Changes in Costs
– Δ PCS / Δ WM > 0
– Δ PCS / Δ WF > 0
– Δ PCS / Δ PZ > 0
Fertility
Modern Economic Approach

Price
 PCS

Full Income
 YF

 CCS = C( WM, WF, PZ )
= ( WM X T ) + ( WF X T) + V
DEMAND FOR CHILDREN
– CS* = D (PCS, PA, YF, Preferences)
THE IMPACT OF WAGES ON THE PRICE OF CHILD SERVICES
AND FULL INCOME
PRICE OF CHILD SERVICES
FULL INCOME
INCREASE
INCREASES, TO THE EXTENT
THAT THE INDIVIDUAL WITH
THE HIGHER WAGE
CONTRIBUTED TO
PRODUCTION OF CHILD
SERVICES
INCREASES
DECREASE
DECRASES, TO THE EXTENT
THAT THE INDIVIDUAL WITH
THE LOWER WAGE
CONTRIBUTED TO
PRODUCTION OF CHILD
SERVICES
DECREASES
WAGE CHANGE