Economic Analysis of Fertility in Israel: Point and Counterpoint

Abstract

I view, in this paper, cross-section evidence on fertility in Israel through a very simple hypothesis based on the links among education, the cost of time of women, and the full price of children. The hypothesis is useful in explaining some aspects of behavior, but important facets of the variation in fertility remain unexplained. In recent years there have been several attempts to bring the determination of family size within the scope of the economics of household behavior (see Leibenstein 1957; Becker 1960; Mincer 1963; Easterlin 1968, 1969; Schultz 1969; and others). An economic theory of fertility starts with the postulate that hotuseholds maximize some utility function in which children and other goods appear as arguments subject to resource constraints in which the prices or the costs of production of the arguments appear. The effect of a change in any variable on the number of children depends on the extent to which it lifts the general resource constraint and induces an income effect and the extent to which it changes relative prices and induces a substitution effect. Recent developments in the theory of the household (particularly by Becker [1965] and Lancaster [1966]) provide a unified framework for handling various aspects of the fertility decision. However, in choosing