House prices, fertility and economic growth

Abstract

Fertility rebounds with per capita income growth in most high income OECD countries. Low fertility, rising house prices and gender wage gaps persist in developed Asia. This paper presents a model where endogenous increases in house prices play an important role in the e�ect of rising female relative wages on fertility. The results suggest that fertility decline need not reverse as female relative wages rise with per capita income. For given house prices, demand for children may rise with female relative wages if housing comprises a su� ciently large share of childrearing. However, growth in wages and the working age population raises the market price of housing. In turn, fertility declines unambiguously with female relative wages. The analysis provides a novel mechanism whereby past demographic change may impact current fertility. This has relevance for young households in Hong Kong and Singapore who face particularly steep increases in house prices. (JEL J13; J16: R21; O40)