Women's Fertility, Market Work and Marital Status: A Test of the New Household Economics with International Data

Abstract

Since its emergence from the pioneering efforts of Becker (1960) and Mincer (1962), the new household economics has inspired a wide range of theoretical and empirical models of demographic behaviour, with particular emphasis on fertility, female labour force participation and marriage. A central principle of these models has been to assign critical roles to the values of men's and women's time in the decision-making process. In the present paper,' I adhere to that principle while seeking to contribute to the empirical literature in two important respects. 1 The econometric model developed in this paper incorporates several improvements over prior models. Although women's fertility, market work and marital status are closely interconnected, their endogeneity has not been fully reflected in previous econometric work.2 In the present model, all these demographic variables are endogenous and are subject to a common set of incomes and prices. Another distinctive feature represents an extension of the approach developed by Butz and Ward (1979). They used interaction termsmen's and women's earnings weighted by female labour force participation-to explain variation in US birth rates. Here, earnings are interacted with the endogenous demographic variables in all equations. Simulation experiments are used to gauge the total impacts of changes in men's and women's pay under alternative sets of initial conditions. 2 For the first time (so far as known), cross-national data are used in a direct test of the new household economics. Although the literature contains