From Busts to Booms in Babies and Godies

Michele Boldrin, Larry Jones and Alice Schoonbroodt

No 689, 2006 Meeting Papers from Society for Economic Dynamics

Abstract: After the fall in fertility during the Demographic Transition, many developed countries experienced a baby bust, followed by the Baby Boom and subsequently a return to low fertility. Received wisdom from the Demography literature links these large fluctuations in fertility to the series of Economics 'shocks' that occurred with similar timing -- the Great Depression, WWII, the economic expansion that followed and then the productivity slow down of the 1970's. To economists, this line of argument suggests a more general link between fluctuations in output and fertility decisions, of which the Baby-Bust-Boom-Bust event (BBB) is a particularly stark example. This paper is an attempt to formalize the conventional wisdom in simple versions of stochastic growth models with endogenous fertility. First, we develop initial tools to address the effects of ''temporary'' shocks to productivity on fertility choices. Second, we analyze calibrated versions of these models. We can then answer several qualitative and quantitative questions: Under what conditions is fertility pro- or countercyclical? How large are these effects and how is this related to the 'persistence' of the shocks? How much of the BBB can be accounted for by the kinds of medium run productivity fluctuations described as computed from the data? Preliminary results show that under reasonable parameter values fertility is procyclical, that the elasticity of fertility to shocks lays between 1 and 1.7 and, finally, that in our models, productivity shocks capture between 1/3 and 2/3 of the US baby bust and between ¼ and ½ of the US baby boom

Keywords: fertility; productivity shocks; baby bust and boom (search for similar items in EconPapers)
JEL-codes: J1 O4 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-dge
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Related works:
Working Paper: From Busts to Booms, in Babies and Goodies (2005)
Working Paper: From Busts to Booms in Babies and Goodies (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed006:689

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