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When having many children pays: a case study from Taiwan

Abstract

The objective of this paper is to investigate the direct financial cost and benefit of raising children during a demographic transition in Taiwan, and to examine whether fertility decline is consistent with Caldwell’s wealth flow theory, which states that fertility decline is caused by reduced benefits of children. The paper describes a method of estimating the average economic returns of children over the entire parental lifecycle, using a 42-year span of Taiwanese household and individual economic pseudo-panel data. Results show that returns to children may turn positive and are not highly negative all the time, as found in the previous literature.

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Acknowledgements

The author thanks Andrew Mason, Ronald Lee, An-Chi Tung, Meechai Orsuwan, Sang-Hyop Lee, Robert Retherford, Byron Gangnes, Arnaud Dellis, and two anonymous referees for their valuable comments and suggestions. Research for this paper was supported by National Transfer Accounts project, which was funded by two grants from National Institutes of Health, NIA R01 AG025488 and R37 AG025247.

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Correspondence to Mun Sim Lai.

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Responsible editor: Junzen Zhang

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Lai, M.S. When having many children pays: a case study from Taiwan. J Popul Econ 25, 323–348 (2012). https://doi.org/10.1007/s00148-011-0373-9

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Keywords

  • Cost and benefit of children
  • Fertility
  • Familial transfers

JEL Classification

  • J13
  • D10
  • I2