Abstract
We revisit the question of why fertility behaviors and educational decisions appear to vary systematically across ethnic groups. We assess the possibility that differences in fertility across groups remain even though their socio-economic characteristics are similar. More specifically, we consider that parents’ fertility decisions are affected by the uncertainty concerning the future economic status of their offspring. We assume that this uncertainty varies across groups and is linked to the size of the group one belongs to. We find theoretical support for the minority status hypothesis according to which members of large minorities usually have a higher fertility than those in the majority facing low potential for social mobility while small minorities have lower fertility.
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Notes
Number of children ever born to 1,000 women aged 40–44. Source: U.S. Census Bureau.
Source: U.S. Census Bureau.
These differentials become even bigger when we look at the proportion of college graduates or more.
In a study on Chinese-American women, Espenshade and Ye (1994) explain the lower fertility of this ethnic group with the sacrificial effort in their pursuit of social and economic equality.
This result is not in contradiction with Hondroyiannis (2010) as he documents a negative average effect of aggregate uncertainty on total fertility rates, while we are looking at the heterogeneous effect of uncertainty on completed fertility for different groups. It could perfectly be the case that these heterogeneous effects net out and give a negative overall effect, but this is not the scope of our paper.
Some papers already introduced uncertainty in endogenous fertility models, but, to our knowledge, the uncertainty focuses on the survival rate, never on the expected economic status of children.
We discuss in Section 5 another possible interpretation of our model in which uncertainty arises from the matching process in the marriage market.
The modeling strategy is similar to that of Kalemli-Ozcan (2003), but instead of the survival rate, we take the future wage rate of children as stochastic.
The logarithmic formulation implies that a fixed fraction of parental time (and thus income) is devoted to children, so that consumption is never affected. Furthermore, if the price of well-off children falls (through an increase in the expected wage rate), the relative price of education with respect to childbearing has not changed, which is why the trade-off between quality and quantity of children is not affected by the expected outcome on the labor market and that optimal decisions remain the same.
This feature certainly constrains our results in the sense that we rule out the possibility that, facing a greater risk, parents would decide to decrease their demand for children, but generalizing our model to a less specific utility function would require further research.
See Simon and Warner (1992).
See Bisin and Verdier (2000).
Recall that the Bernoulli distribution yields 1 with some probability p and 0 with probability 1 − p.
Again, thinking the other way around of a poor intragroup outcome and an extragroup match bonus would not change the result. The only crucial assumption is that there should be some variability in the outcome, that is μ s ≠ μ d .
Given the fact that wages are always positive regardless of the matching outcome so that utility is well-behaved, it is appropriate to use a local approximation like the Delta method.
This mechanism is actually similar to the precautionary demand for children that arises when the survival rate is stochastic as in Kalemli-Ozcan (2003).
Whatever the number of groups, it is noticeable from Eq. 13 that the only way to have a society divided into steady shares is that either one group tends to 1 and all the others to 0, or fertility of the various groups should be equal. In this latter case, the risk term should be the same for all groups and thus they should all be of equal size. We are, thus, able to say that a one-group society or a society divided among groups of equal size are potential steady states. It is, however, very difficult to derive more analytical results with more than two groups.
See Wiggins (1990).
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Acknowledgements
Both authors acknowledge the financial support from the Belgian–French-speaking community (Convention ARC 09/14-018 on “Sustainability”) and from the Belgian Federal Government (Grant PAI P6/07 on “Economic Policy and Finance in the Global Economy: Equilibrium Analysis and Social Evaluation”). Paolo Melindi Ghidi also acknowledges financial support from the project “Cultural Assimilation of Ethnic Minorities and Elites”, University of Bologna. This article benefitted from great improvements following comments from Thomas Baudin, Matteo Cervellatti, David de la Croix, Thierry Verdier, Paolo Onofri, as well as participants to the Doctoral Workshop in Economics in Louvain-la-Neuve, Overlapping Generation Days in Vielsam, Summer School in Economic Growth at the Hebrew University in Jerusalem, and macro-lunch seminar at Université catholique de Louvain. We are also grateful to two anonymous referees and editor Alessandro Cigno for valuable comments.
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Chabé-Ferret, B., Melindi Ghidi, P. Differences in fertility behavior and uncertainty: an economic theory of the minority status hypothesis. J Popul Econ 26, 887–905 (2013). https://doi.org/10.1007/s00148-012-0434-8
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DOI: https://doi.org/10.1007/s00148-012-0434-8