Abstract
This paper describes how fertility is determined in a model that assumes the existence of child-care services. When child-care services exist, two multiple states result: a state that brings about low fertility with low female labor partici-pation, and a state that brings about high fertility with high female labor participation. This result is consistent with the positive correlation that is found between the total fertility rate and female labor participation in developed countries, as described by Ahn and Mira (2002) [1] and others. Moreover, this paper presents analyses of the effects of child-care policies, for example, a child allowance and a subsidy for child-care services policies. These policies instantaneously raise fertility. However, in a dynamic general equilibrium model, these policies might pull down fertility because capital accumulation decreases in the long run. If income growth continues in the long run, then the child allowance can always pull up fertility. However, if the income level converges to constant level in the long run, then the child allowance might pull down fertility. This result shows that the effect of the child allowance depends on whether income growth ceases or continues in the long run.
Highlights
We find three positive correlations in developed countries: fertility and female labor participation, fertility and income per capita, and fertility and the magnitude of governmental family policy
If income growth continues in the long run, a child allowance can always raise fertility
This paper presents analysis of how fertility is determined and affected by child-care services in a dynamic general equilibrium model under the assumption that complete substitution exists between individual child-care time and child-care services
Summary
We find three positive correlations in developed countries: fertility and female labor participation, fertility and income per capita, and fertility and the magnitude of governmental family policy. Martínez and Iza (2004) [9] analyzed how fertility is determined under the assumption of complete substitution between a parent’s child care and market child-care services in a dynamic general equilibrium model and derived a positive correlation between fertility and female labor participation. With market child-care services considered by Apps and Rees (2004) [7] or Martínez and Iza (2004) [9] in the model economy presented by Galor and Weil (1996) [6], a positive relation is apparent between fertility and female labor participation. This fact is consistent with theoretical analyses in a market child-care service model (Apps and Rees (2004) [7], Martínez and Iza (2004) [9], Hirazawa and Yakita (2009) [8]).
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
