Childbearing postponement, its option value, and the biological clock

David de la Croix and Aude Pommeret
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Aude Pommeret: IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc

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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 re- production technology (search for similar items in EconPapers)
Date: 2021-04
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Citations: View citations in EconPapers (2)

Published in Journal of Economic Theory, 2021, 193, pp.105231. ⟨10.1016/j.jet.2021.105231⟩

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Related works:
Journal Article: Childbearing postponement, its option value, and the biological clock (2021)
Working Paper: Childbearing Postponement, its Option Value, and the Biological Clock (2018)
Working Paper: Childbearing Postponement, its Option Value, and the Biological Clock (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03969089

DOI: 10.1016/j.jet.2021.105231

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