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Economics of Fertility. Chapter 5 Part I. Economics of Fertility. 1960s about 4 million births in the US Nearly 1 out of every 8 women gave birth between the ages of 15 and 44 Nearly 1 in 4 between the ages of 20 to 24 In 2000 there was about 4 million births in the US

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Economics of fertility

Economics of Fertility

Chapter 5

Part I


Economics of fertility1
Economics of Fertility

  • 1960s about 4 million births in the US

    • Nearly 1 out of every 8 women gave birth between the ages of 15 and 44

    • Nearly 1 in 4 between the ages of 20 to 24

  • In 2000 there was about 4 million births in the US

    • But only 1 our of every 16 in the 15 to 44


Economics of fertility2
Economics of Fertility

  • Was introduced by Malthus to economics and his basic tenet was that

  • Population grows at a geometric rate, food production grew at an arithmetic rate

Population

Growth rate

Food

Time


Ways in which to deal with population explosion
Ways in Which to Deal With Population Explosion

  • Positive Checks

    • War

    • Famine

    • Pestilence

  • Preventive Checks

    • Moral Restraint

    • Contraception

    • Abortion


Fertility in modern economics
Fertility in Modern Economics

  • Once again,

    • Gary Becker

  • Demography

    • Study of population


Terms
Terms

  • Birth Rate

    • Number of births in a year (or given period) devided by the total population

    • In 2001, 4.03 million births

    • 285 million people


Birth rate
Birth Rate

  • Normally based on 1,000 people

  • Hence, birth rate for the U.S. in 2001 was

  • 14.1 per 1000 population

  • The per 1000 can be skipped since it is generally understood to be such


Natural rate of population
Natural Rate of Population

  • The natural rate of population is defined as:

    • Birth rate – Death Rate

    • Where death rate is constructed similar to birth rate


Birth rate vs fertility rate
Birth Rate vs. Fertility Rate

  • Birth Rate is based on whole population

  • Fertility rate is based on at-risk population

  • Thus, fertility rate can be constructed based on women age 15 to 44.


Fertility rate
Fertility Rate

  • In 2001 the fertility rate in the U.S. was 65.3 per 1000

  • An approximation can be obtained by

    • Multiply by 2 the birth rate

      • 14.1 X 2 = 28.1 (account for about 50% being male)

      • 28.1 X 2.3 = 64.63 (for about little more than 50% of the population of female population being under 15 or older than 44


Fertility rate1
Fertility Rate

  • Age specific

  • Non-marital fertility rates

  • Sub groups:

    • By race

    • Ethnicity

    • etc


Total fertility rate
Total Fertility Rate

  • Total Fertility Rate (TFR)

  • TFR = 5 (FR10-14 + FR15-19 + FR20-24 +…

    + FR45-49)

  • In 2001 in the US the TFR was 2.034


Zero population growth
Zero Population Growth

  • Zero Population Growth (ZPG)

  • ZPG is obtained when TFR = 2.13

  • This is because 50% births are male

  • And some women either die or do not have children, hence TFR > 2

  • In the US ZPG < 0


Measures of us fertility 2001

TERM

DEFINITION AND FORMULA

VALUE

NUMBER OF BIRTHS

-

4.03MILLIONS

BIRTH RATE

BIRTHS PER 1000 POP =

(BIRTHS/POP) * 1000

14.1

FERTILITY RATE

BIRTHS PER 1000 WOMEN, AGE 15-44 =

(BIRTHS/NUM. OF WOMEN, AGE 15-44) * 1000

65.3

NONMARITAL FERTILITY RATE

BIRTHS PER 1000 UNMARRIED WOMEN, AGE 15-44 =

(BIRTHS TO UNMARRIED WOMEN/ NUM. UNMARRIED WOMEN, AGE 15-44) * 1000

43.8

TOTAL FERTILITY RATE

NUMBER OF LIFETIME BIRTHS TO 1000 WOMEN IF THEY HAD CURRENT AGE-SPECIFIC FERTILITY RATES

2034

MEASURES OF US FERTILITY, 2001


Baby boom vs baby bust us fertility rate and total births 1940 2001

5

4

3

2

200

150

100

50

FERTILITY RATE (LEFT SCALE)

# BIRTHS (RIGHT SCALE)

FERTILITY RATE (BIRTHS/1000 WOMEN)

TOTAL BIRTHS (MILLIONS

1940 1960 1980 2000

Baby Boom vs. Baby BustUS FERTILITY RATE AND TOTAL BIRTHS, 1940-2001



1970

1995

AUSTIRA

2.3

1.4

FRANCE

2.5

1.7

GERMANY

2.0

1.3

ITALY

2.4

1.3

PORTUGAL

2.8

1.4

RUSSIAN FERDERATION

2.0

1.4

SWEDEN

1.9

1.7

UNITED KINGDOM

2.4

1.7

BIRTHS PER WOMAN, SELECTED EUROPEAN COUNTRIES, 1970 AND 1995


Fertility modern economic approach
FertilityModern Economic Approach

  • Preferences

    • Demand for Child Services

      • Quantity

      • Quality

        U = U (CS, A)

        where A are all other goods


Fertility modern economic approach1
FertilityModern Economic Approach

  • Production

  • Child Services production function

    • CS = F(T,Z)

    • Where T is the Time involved and

    • Z the cost of purchasing things for them


Fertility modern economic approach2
FertilityModern Economic Approach

  • COST

    • Opportunity Cost

      • CCS = C( WM, WF, PZ )

  • Changes in Costs

    • Δ PCS / Δ WM > 0

    • Δ PCS / Δ WF > 0

    • Δ PCS / Δ PZ > 0


Fertility modern economic approach3
FertilityModern Economic Approach

  • Price

    • PCS CCS = C( WM, WF, PZ )

  • Full Income

    • YF = ( WM X T ) + ( WF X T) + V

  • DEMAND FOR CHILDREN

    • CS* = D (PCS, PA, YF, Preferences)


  • WAGECHANGE

    PRICE OF CHILD SERVICES

    FULL INCOME

    INCREASE

    INCREASES, TO THE EXTENT THAT THE INDIVIDUAL WITH THE HIGHER WAGE CONTRIBUTED TO PRODUCTION OF CHILD SERVICES

    INCREASES

    DECREASE

    DECRASES, TO THE EXTENT THAT THE INDIVIDUAL WITH THE LOWER WAGE CONTRIBUTED TO PRODUCTION OF CHILD SERVICES

    DECREASES

    THE IMPACT OF WAGES ON THE PRICE OF CHILD SERVICES AND FULL INCOME


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