Working Paper Number
WP #14010, April 2014
This paper studies fertility choices and fertility policies when children's earning abilities are random and parents are altruistic. We characterize equilibrium allocations arising in endowment economies with either complete or incomplete markets. Both models can replicate a number of empirical regularities, such as inequality, social mobility and fertility decreasing with ability, but the incomplete markets model provides a number of more plausible predictions. We find that fertility policies are generally welfare detrimental in our models even when fertility is inefficiently high.
D11, D31, D51, D61, I3, J1
Cordoba, Juan Carlos and Liu, Xiying, "Altruism, fertility and risk" (2014). Economics Working Papers (2002–2016). 23.