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Childbearing Postponement, its Option Value, and the Biological Clock

David de la Croix () and Aude Pommeret ()
Additional contact information
Aude Pommeret: SEE, City University of Hong Kong and IREGE Université Savoie Mont Blanc

No 2017016, Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: Having children is like investing in a risky project. Postponing birth is like delaying an irreversible investment. It has an option value, which depends on its costs and benefits, and in particular on the additional risks motherhood brings. We develop a parsimonious theory of childbearing postponement along these lines. We derive its implications for asset accumulation, income, optimal age at first birth, and childlessness. The structural parameters are estimated by matching the predictions of the model to data from the National Longitudinal Survey of Youth NLSY79. The uncertainty surrounding income growth is shown to increase with childbearing, and this increase is stronger for more educated people. This effect alone can explain why the age at first birth and the childlessness rate both increase with education. We use the model to simulate two hypothetical policies. Providing free medically assisted reproduction technology does not affect the age at first birth much, but lowers the childlessness rate. Insuring mothers against income risk is powerful in lowering the age at first birth.

Keywords: Childlessness; Late parenthood; Real option; Career uncertainty; Assisted reproduction technology (search for similar items in EconPapers)
JEL-codes: J13 D91 (search for similar items in EconPapers)
Pages: 42
Date: 2017-10-01
New Economics Papers: this item is included in nep-dem
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