Abstract
Studies in family economics and anthropology suggest that grandmothers are a highly valuable source of childcare assistance. As such, availability of grandmothers affects the cost of having children, and hence fertility decisions of young parents. In this paper, we develop a simple model to assess the fertility implications of the fluctuations in both output (as argued by demographers) and grandmother-availability induced child-care costs over the period 1920-1970. Model does a good job of mimicking the bust-boom-bust pattern during this period. When the child-care cost channel is shut down, the model’s performance weakens significantly; in particular, it fails to capture the bust in the 1960’s altogether.
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