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Journal of Economic Growth

, Volume 23, Issue 4, pp 427–463 | Cite as

Why did rich families increase their fertility? Inequality and marketization of child care

  • Michael Bar
  • Moshe HazanEmail author
  • Oksana Leukhina
  • David Weiss
  • Hosny Zoabi
Article

Abstract

A negative relationship between income and fertility has persisted for so long that its existence is often taken for granted. One economic theory builds on this relationship and argues that rising inequality leads to greater differential fertility between rich and poor. We show that the relationship between income and fertility has flattened between 1980 and 2010 in the US, a time of increasing inequality, as high income families increased their fertility. These facts challenge the standard theory. We propose that marketization of parental time costs can explain the changing relationship between income and fertility. We show this result both theoretically and quantitatively, after disciplining the model on US data. We explore implications of changing differential fertility for aggregate human capital. Additionally, policies, such as the minimum wage, that affect the cost of marketization, have a negative effect on the fertility and labor supply of high income women. We end by discussing the insights of this theory to the economics of marital sorting.

Keywords

Income inequality Marketization Differential fertility Human capital Minimum wage 

JEL Classification

E24 J13 J24 J31 J38 

Supplementary material

10887_2018_9160_MOESM1_ESM.pdf (121 kb)
Supplementary material 1 (pdf 120 KB)

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.San Francisco State UniversitySan FranciscoUSA
  2. 2.CEPRTel-Aviv UniversityTel AvivIsrael
  3. 3.Federal Reserve Bank of St. LouisSt. LouisUSA
  4. 4.Tel Aviv UniversityTel AvivIsrael
  5. 5.New Economic SchoolMoscowRussia

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