The optimal trade-off between quality and quantity with uncertain child survival

Thomas Baudin

No 2010057, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: The present paper investigates a standard model of endogenous fertility when child survival to adulthood is uncertain. In this framework, I first show that facing the risk their children die before reaching adulthood, parents don’t always formulate a precautionary demand for children. Indeed, there exists a non-empty set of utility functions for which parents undershoot their number of children rather than overshooting it. Second, the properties of the optimal economic policy will crucially depend on the manner the Social Welfare Function takes uncertainty into account. More precisely, if Social Welfare is evaluated after the resolution of uncertainty, the parental response to uncertainty is a source of social inefficiency. Then, individual decisions have to be corrected through tax or transfer on both births and education. This property becomes crucial to determine the optimal public response to a mortality crisis in presence of positive externalities on education.

Keywords: fertility; uncertain child survival; optimal conditions; family policy (search for similar items in EconPapers)
JEL-codes: D10 H21 J13 J18 (search for similar items in EconPapers)
Date: 2010-10-01
New Economics Papers: this item is included in nep-dge
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2010057

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