The Effect of Relative Income on Fertility (in Japanese)

Tsukasa Matsuura

Economic Analysis, 2011, vol. 185, 48-64

Abstract: The purpose of this study is to analyze the effect of income and cost of children on fertility, using the conceptual framework of "relative income." In other words, the main novelty is that two hypotheses are tested. Firstly, relative income, defined by the difference between personal household income and the mean value of reference group's household income, affects fertility. Secondly, the rise of relative income lowers fertility through raising the cost of children. We obtain the following results. Firstly, the cost and number of children differ by the reference group and the cost of children is higher in case of higher education levels. Secondly, in relatively poorer group, the relative household income positively correlates with fertility, but the absolute personal income negatively correlates with fertility. Thirdly, the rise of relative income tends to increase the cost of children, and as a result, it lowers fertility. These results imply that while cash benefit does not lead to the rise in fertility because it does not change relative income, but lowering the cost of children increases fertility.

Date: 2011
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