Childbearing postponement, its option value, and the biological clock

Abstract

Having children is like investing in a risky project. Postponing birth is like delaying an irreversible investment. It has an option value, which depends on its costs and benefits, and in particular on the additional risks motherhood brings. We develop a parsimonious theory of childbearing postponement along these lines. We derive its implications for asset accumulation, income, optimal age at first birth, and childlessness. The structural parameters are estimated by matching the predictions of the model to data from the National Longitudinal Survey of Youth NLSY79. The uncertainty surrounding income growth is shown to increase with childbearing, and this increase is stronger for more educated people. This effect alone can explain why the age at first birth and the childlessness rate both increase with education. We use the model to simulate two hypothetical policies. Providing free medically assisted reproduction technology does not affect the age at first birth much, but lowers the childlessness rate. Insuring mothers against income risk is powerful in lowering the age at first birth.

Labor Market Frictions and Lowest Low Fertility

“…Then for household heads and spouses, we calculate the average incomes of unemployed from unemployment insurance (including zeros) as a fraction of the average labor income (using gross employee cash or near cash income) of the employed. 21 Probability of not being able to conceive is 8% at age 20, increases slowly to 23% by age 30, and then rapidly to 57.5% at age 40 and 95% at age 45. 22 In the simulations, the earnings of a college-educated husband with a permanent contract at the age 25 of her wife is normalized to 1.…”

“…We take j values, which determine the probability that an age-j woman might get pregnant upon trying, from Sommer (2016, Figure 1). 21 We select the parameters of the wage process for males w m (e; a; j; P ) = a exp(! e;P 0 + !…”

“…De la Croix and Pommeret (2018) show that uncertainty surrounding income growth itself increases with childbearing.…”

Fertility and Labor Market Responses to Reductions in Mortality

“…By drawing a new, causal link between child mortality decline and increases in women's labor force participation and childlessness, we provide a new theory of drivers of childlessness that contributes to an active literature in this area (Baudin, de la Croix, and Gobbi 2019, Baudin, de la Croix, and Gobbi 2015, Gobbi 2013, Currie and Schwandt 2014, Ananat, Gruber, and Levine 2007. 3 Our key finding that child mortality decline encourages fertility delay and higher rates of women's labor force participation augments research on the interplay between fertility and women's careers (Lundborg, Plug, and Rasmussen 2017, Adda, Dustmann, and Stevens 2017, Jensen 2012, Albanesi and Olivetti 2014, Albanesi and Olivetti 2016, Goldin and Katz 2002, Goldin 1997, and on fertility timing (de la Croix and Pommeret 2018, Herr 2016, Choi 2017, Ananat and Hungerman 2012. Our contribution here is to identify child mortality decline as a factor driving both fertility delay and women's labor force participation.…”

Effects of pandemics uncertainty on fertility

“…We suggest that precautionary savings explain countries' cross-country fertility levels and changes. Several theoretical models link precautionary savings to fertility decisions [e.g., ( 22 )]. However, it is essential to note that empirical studies on testing the validity of precautionary savings motivation have provided mixed findings.…”