The Value and Allocation of Time in High-Income Countries: Implications for Fertility

Abstract

This article restates an economic theory of fertility decline in modern industrial societies that links the decline in fertility to the increase in real wages and to the increase in womens wages relative to those of men. The household demand framework assigns importance to the parent-specific time requirements of having (and enjoying) children and the distinct price effects of the opportunity value of womens and mens time in market and nonmarket production. The framework implies that if child care duties can be transferred to the market without loss of parental satisfaction then the link between the opportunity value of the parents time and the shadow price of children would be partially broken. Fertility may not therefore rebound substantially and permanently from its current trough though it may become less sensitive to womens wages for reasons indicated below. The household demand framework predicts that in traditional nuclear families in which the wife specializes in nonmarket production activities increases in the market wage opportunities for women relative to men will lead to downward pressure on desired fertility. But households will also attempt to substitute the males time for the females in some child care activities and will transfer some of these child care duties and scholling functions to lower cost providers in the market. Cross-sectional differences in US fertility and labor force participation confirm some of these patterns in industrially advanced high-income countries. Many questions remain unanswered however and most data on economic and demographic characteristics of these populations remain unalayzed.