Economics of Fertility

1. Economics of Fertility Chapter 5 Part II

2. FertilityModern Economic Approach • Preferences • Demand for Child Service • Quantity • Quality U = U (CS, A) where A are all other good • Production • Child Services production function • CS = F(T,Z) • Where T is the Time involved and • Z the cost of purchasing things for them

3. FertilityModern 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

4. FertilityModern Economic Approach • Price • PCS CCS = C( WM, WF, PZ ) • Full Income • YF = ( WM X T ) + ( WF X T) + V • DEMAND FOR CHILDREN • CS* = D (PCS, PA, YF, Preferences

5. FertilityModern Economic Approach:Comparative Statics • A Change in Full Income Effects • Income Effect Ξ Δ CS* / Δ YF > 0 • A Change in the Wage Rate • Substitution Effect Ξ Δ CS* / Δ WF < 0 • Assuming constant YF

6. PRICE OF CHILD SERVICES D1 Do P1 P0 AMOUNT OF CHILD SERVICES DEMANDED CS’ CSo CS1 HOW AN INCREASE IN THE WAGE RATE AFFECTS THE AMOUNT OF CHILD SERVICES DEMANDED

7. (A) (B) PRICE PRICE D1 D1 Do Do P1 P1 P0 P0 CHILD QUANTITY CHILD QUALITY N’ L’ Lo L1 No N1 THE EFFECT OF AN INCREASE IN THE WAGE RATE ON THE QUANTITY AND QUALITY OF CHILDREN

8. THE EFFECT OF AN INCREASE IN THE WAGE RATE ON THE QUANTITY AND QUALITY OF CHILDREN • Δ PL / Δ N > 0 • Δ PN / Δ L > 0

9. (A) (B) BIRTH RATE, DEATH RATE WAGE So S* DR BR S1 Wo W* W1 WAGE L W1 W* Wo L* MALTHUSIAN POPULATION GROWTH AND WAGES

10. (A) (B) BIRTH RATE, DEATH RATE WAGE S* DRo BR S** W* W** D DR1 WAGE L W** W* L* THE GLOOMY EFFECT OF A DECLINE IN THE MORTALITY RATE

11. (A) BIRTH RATE, DEATH RATE (B) WAGE S* DR BR S** W1 W* D1 Do WAGE W* W1 L L* THE GLOOMY EFFECTS OF AN INCREASE IN WORKER PRODUCTIVITY