TY - JOUR
T1 - Baby busts and baby booms
T2 - The fertility response to shocks in dynastic models
AU - Jones, Larry E.
AU - Schoonbroodt, Alice
N1 - Publisher Copyright:
© 2016 Elsevier Inc.
PY - 2016/10/1
Y1 - 2016/10/1
N2 - While there has been a substantial effort to understand the Demographic Transition alongside the transition to sustained economic growth, fertility fluctuations have not been analyzed in the business cycle literature. This paper builds a model of fertility choice with dynastic altruism, age-structured population and aggregate productivity shocks. We show that, under reasonable parameter values, fertility is pro-cyclical and that, following a shock, fertility continues to cycle. Applied to the U.S. experience in the 20th century, the Great Depression generates a baby bust of 58% of that seen in the U.S. in the 1930s, followed by a Baby Boom of 77% of that seen in the U.S. in the 1950s. As observed in U.S. estate data, the model predicts that small cohorts receive relatively large per child transfers from parents. Finally, statistical analysis across countries in the 1930s and 1950s further supports our theory.
AB - While there has been a substantial effort to understand the Demographic Transition alongside the transition to sustained economic growth, fertility fluctuations have not been analyzed in the business cycle literature. This paper builds a model of fertility choice with dynastic altruism, age-structured population and aggregate productivity shocks. We show that, under reasonable parameter values, fertility is pro-cyclical and that, following a shock, fertility continues to cycle. Applied to the U.S. experience in the 20th century, the Great Depression generates a baby bust of 58% of that seen in the U.S. in the 1930s, followed by a Baby Boom of 77% of that seen in the U.S. in the 1950s. As observed in U.S. estate data, the model predicts that small cohorts receive relatively large per child transfers from parents. Finally, statistical analysis across countries in the 1930s and 1950s further supports our theory.
KW - Dynastic models
KW - Fertility cycles
KW - Stochastic growth models
UR - http://www.scopus.com/inward/record.url?scp=84979649809&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84979649809&partnerID=8YFLogxK
U2 - 10.1016/j.red.2016.07.001
DO - 10.1016/j.red.2016.07.001
M3 - Article
AN - SCOPUS:84979649809
SN - 1094-2025
VL - 22
SP - 157
EP - 178
JO - Review of Economic Dynamics
JF - Review of Economic Dynamics
ER -