Discussion Paper No.1704

Abstract :
We show that a fertility rebound can occur as the female wage rate rises with economic development. Under plausible conditions, capital accumulation raises the marginal product of labor and hence the female wage rate. Unless the economy is trapped in a lower equilibrium of economic development, the fertility rate starts to decline at a certain level of the female wage rate and then turns upward at a higher female wage, i.e., a fertility rebound. For such fertility rebounds to appear, the availability of external child-care at high female wages is crucial. Otherwise, the fertility rate might continue to decline.

Keywords : gender wage gap, child-care outside the home, female labor force participation

JEL code: D11, J13, J16, O11