Can Theory Explain the Evidence on Fertility Decline Reversal?

Abstract

This article presents a model of household fertility and child-rearing choice in which rising female relative wages is the mechanism whereby economic growth may reverse fertility decline. I find that an increase in the logarithm, rather than the level, of wages affects fertility at advanced stages of development. Economic growth may reverse fertility decline beyond a threshold logarithm per capita output, which depends on child-care prices, maternity pay, preference for children and growth in female wages relative to male wages. These results inform the recent empirical debate and identify cross-country differences as important considerations for future empirical research.