The Dynamics of Fertility, Bargaining, and Human Capital Accumulation

Anning Xie ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: This paper studies the role of intrahousehold bargaining in shaping women’s fertility decisions over the life cycle. I build and estimate a quantitative life-cycle model in which fertility is jointly determined by female labor supply and women’s bargaining power within the household under limited commitment, with endogenous marriage and divorce. A cen tral feature of the model is a dynamic feedback loop: childbirth lowers women’s wages and outside options, weakening their bargaining position and feeding back into subsequent fertility decisions. Exploiting the relaxation of fertility restrictions in China, I document empirically that couples with misaligned fertility preferences exhibit significantly smaller fertility responses and higher divorce rates than couples with aligned preferences. The es timated model replicates these reduced-form moments and further reveals the quantitative importance of limited-commitment frictions in depressing marriage incentives, generating inefficient divorce, and thereby suppressing fertility rates. Eliminating them raises com pleted fertility by 1.77% and marriage rates by 4.48%. Finally, the effectiveness of family policies depends critically on the degree of commitment within the household.

Keywords: fertility; intrahousehold bargaining; marriage and divorce; female labor supply; human capital (search for similar items in EconPapers)
JEL-codes: D15 J12 J13 J16 (search for similar items in EconPapers)
Pages: 71
Date: 2026-06
New Economics Papers: this item is included in nep-dge and nep-gth
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2025_760

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