Endogenous Fertility, Childlessness, and Economic Growth

Abstract

Many economically developed countries are confronting a declining birth rate and an aging population. Although many economists have attempted to explain these phenomena, they have not devoted sufficient attention to the existence of households without children. One important factor affecting the low fertility rate is high levels of childlessness. As described herein, we extend a simple growth model to consider the economic effects of rising childlessness rates on the utility of households and on the dynamic behaviors of an economy. Households are assumed to have different preferences for children. As a result of utility maximization, some households choose to have no children. Subsequently, we analyze the economic effect of an increase in the childlessness rate. We show that such a change tends to have adverse effects on household utility. Government policy, specifically a child allowance policy, is also considered. Results show that the marginal effects of such a policy might positively affect the utility of all households: households without children can benefit from such a policy. Furthermore, we provide a simple numerical example and infer the optimal level of a child allowance policy.