Female relative wages, household specialization and fertility

Falling fertility rates have often been linked to rising female wages. However, over the last 40 years the US total fertility rate has been rather stable while female wages have continued to grow. Over the same period, women’s hours spent on housework have declined, but men’s have increased.

This is the abstract from a paper by Dr Christian Siegel that was published in the Review of Economics Dynamics in March 2017.

Christian proposes a model in which households are not perfectly specialized, but both men and women contribute to home production. As the gender wage gap narrows, the time allocations of men and women converge, and while fertility falls at first, the decline stops when female wages are close to those of males.

Rising relative wages increase women’s labour supply and due to higher opportunity cost lower fertility at first, but they also lead to a reallocation of home production and child care from women to men, and a marketization.

He finds that both are important in understanding why fertility did not decline further. In a further quantitative exercise he shows that the model performs well in matching fertility over the entire 20th century, including the overall decline, the baby boom, and the recent stabilization.

Read the full paper here:

https://doi.org/10.1016/j.red.2017.01.010