1. Economics of Fertility
Chapter 5
Part II

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

7. THE EFFECT OF AN INCREASE IN THE WAGE RATE ON THE QUANTITY AND QUALITY OF CHILDRENP1 P0 N’ N1 No D1 Do
PRICE
CHILD QUANTITY
(A) P1 P0 L’ Lo L1 D1 Do
PRICE
CHILD QUALITY
(B)

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

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

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