[Séminaire CREM] Postponement, fertility rebound and dynamics

Abtract:
In this paper, we explore the economic mechanisms that drive the postponement transition in Europe, characterized by, first, a decline in fertility rates and then, an upturn. In particular, we allow agents to choose both the timing of births and the number of children they have. We consider a three-period OLG model, where agents can also invest in their career when young adult, through human capital expenditure, and invest in physical capital to ensure consumption when retired. We show that young households choose to postpone fertility only if they earn a sufficiently high wage. Moreover, wage is endogenous and depends on a trade-off between childbearing and investment in human capital when young. Then, for a given level of work productivity, we can show that in the long-run there exist two stable equilibria: One low equilibrium, featured by a high level of young fertility, no investment in human capital and a relatively low level of income, co-exists with an other stable outcome, where households postpone fertility but rather invest in their human capital and exhibit higher levels of wealth. These dynamics reproduce stylized facts observed in European countries since the mid twentieth century. In addition, we allow agents to differ in their reproductive ability as far as late fertility is concerned. Then, we claim that an improvement in reproductive health involves higher demographic growth but also larger investment in human capital as well as lower capital-labor ratios.

Co-écrit avec J. Etner (EconomiX) et T. Seegmuller (AMSE, CNRS)