Technological progress, income inequality, and fertility

This paper constructs an overlapping-generations model with two different types of technology: modern, which can be accessed only by the skilled, and traditional, which can be accessed by the unskilled. The model described in this paper shows that a rise in the wage premium for skilled workers caused by skill-biased technological changes explains the following key stylized facts: with economic development, the fraction of skilled people increases, the fertility rate declines, and income inequality rises and then falls. The model also explains the observed gradual rises in income inequality in developed countries.      

Child mortality and fertility: public vs private education

How does the effect of child mortality reductions on fertility and education vary across educational systems? To answer this question, we develop an overlapping-generations model where altruistic parents care about both the number and human capital of their surviving children. We find that, under a private education system, if income is low initially, the economy converges to a Malthusian stagnation steady state. For a high level of initial income, the economy reaches a growth path in which children’s education rises and fertility decreases with income. In the growth regime under private education, exogenous shocks that lower child mortality are detrimental for growth: fertility increases and education declines. In contrast, under a public education system, the stagnation steady state does not exist, and health improvement shocks are no longer detrimental for growth. We therefore offer a new rationale for the introduction of public education.     

Education Expansion, Educational Inequality, and Income Inequality: Evidence from Taiwan, 1976–2003

The expansion of higher education in Taiwan starting from the late 1980s has successfully raised the average level of education. Using the concept of the education Gini, we find that the educational inequality declined as average schooling rose during the period of 1976–2003. The impacts of a rising average schooling and a declining educational inequality are also tested empirically in this paper. The evidence supports that a higher level of average schooling will generate a lower income inequality. On the other hand, a lower educational inequality, as measured by education Gini coefficient, will also cause a lower income inequality. Skill-biased technological change that shifts the labor demand from unskilled workers toward skilled workers is the most likely cause for the rising income inequality in Taiwan. However, the trend of rising income inequality could be reversed due to possible future over-education and unemployment in the labor market.     

Interregional equilibrium with heterogeneous labor

The impact of labor migration on interregional equilibrium is studied when workers are heterogeneous in productivity and regional mobility. The skilled respond to market disequilibrium by moving into the most attractive region. The unskilled are immobile in the short-run and move with the skilled in the long-run. Both regions have a neoclassical production function affected by an externality depending on the number of skilled. Workers move according to the utility differential when regional amenities vary with population or according to the wage differential. The equilibrium pattern depends on the unskilled‘s mobility and on migration incentives. Typically, regional imbalance characterizes the equilibrium which is often suboptimal. Received November 7, 1994 / Accepted April 12, 1995     

Strategic transfers, redistributive fiscal policies, and family bonds: a micro-economic analysis

This paper presents a micro-economic model to analyze intergenerational exchange in which the utility maximizing decisions of “selfish” children on family services, labor market activities, and leisure are determined endogenously. We show that altruistic parents’ financial transfers have a disincentive effect on the labor supply of their children and that the children’s equilibrium income is positively correlated with parental income. Based on the theoretical model, we find that redistributing US$1 from children to their parents increases parental transfers by less than US$1, implying that intergenerational public transfers are Ricardian non-neutral. However, the non-neutral redistributive transfers may enhance intergenerational family bonds because the equilibrium levels of services rendered by children to their parents increase.     

Brain drain and technological relationship between skilled and unskilled labor: brain gain or brain loss?

This study analyzes the effect of an increase in the foreign skilled wage rate on the emigration and education decisions of individuals in the home economy. An increase in the foreign skilled wage rate encourages emigration of skilled workers out of the home country, while possible increase in the supply of skilled labor in the home depends on the technological relationship between skilled and unskilled labor in production. Although the average education level will rise when they are complements, the average education level may not necessarily be raised when they are substitutes.     

Childhood Family Structure and Intergenerational Income Mobility in the United States

The declining prevalence of two-parent families helped increase income inequality over recent decades. Does family structure also condition how economic (dis)advantages pass from parents to children? If so, shifts in the organization of family life may contribute to enduring inequality between groups defined by childhood family structure. Using National Longitudinal Survey of Youth data, I combine parametric and nonparametric methods to reveal how family structure moderates intergenerational income mobility in the United States. I find that individuals raised outside stable two-parent homes are much more mobile than individuals from stable two-parent families. Mobility increases with the number of family transitions but does not vary with children’s time spent coresiding with both parents or stepparents conditional on a transition. However, this mobility indicates insecurity, not opportunity. Difficulties maintaining middle-class incomes create downward mobility among people raised outside stable two-parent homes. Regardless of parental income, these people are relatively likely to become low-income adults, reflecting a new form of perverse equality. People raised outside stable two-parent families are also less likely to become high-income adults than people from stable two-parent homes. Mobility differences account for about one-quarter of family-structure inequalities in income at the bottom of the income distribution and more than one-third of these inequalities at the top.     

A New Proposal to Gauge Intergenerational Mobility: Educational Mobility in Europe as a Case Study

This paper is aimed at presenting a new intergenerational mobility index that (a) combines the intergenerational elasticity and the R-squared of the intergenerational regression and (b) enables the expression of the total degree of mobility as the weighted sum of mobility with respect to both parents. As a case study, we apply our proposal to investigate the intergenerational mobility of education in several European countries and its changes across birth cohorts. The results derived from the proposed index indicate that Nordic countries display higher levels of educational mobility than Southern countries, whereas continental countries are in an intermediate position. Moreover, it appears that the degree of mobility increases over time only in those countries with low initial levels and remains stable for the most mobile countries. Finally, for most of the countries the proposed methodology can prove that the degree of educational mobility with respect to each parent tends to converge to the same level over the course of time.     

Intergenerational earnings mobility in Japan among sons and daughters: levels and trends

This paper estimates the extent of intergenerational income mobility in Japan among sons and daughters born between 1935 and 1975. Our estimates rely on a two-sample instrumental variables approach using representative data from the Japanese Social Stratification and Mobility surveys, collected between 1965 and 2005. Father’s income is predicted on the basis of a rich set of variables, and we discuss changes in the Japanese earnings structure for cohorts born between the early 1900s and the 1960s. Our main results indicate that the intergenerational income elasticity (IGE) for both sons and daughters in Japan lies around 0.35, which is an intermediate value, by international standards. We discuss the sensitivity of the IGE to using either personal or family income as the income variable for both fathers and children. We also examine changes across cohorts in the IGE. Results indicate that intergenerational mobility has been roughly stable over the last decades.     

Puzzles and further explorations in the interrelationships of successive births with husband’s income,spouses’ education and race

When fertility is examined in the detail of individual parity progressions and birth-order transitions, important interactions between the effects of income and education are seen. Among the findings are: the negative effect of education on fertility is stronger at all parities for less educated compared to more highly educated women. Additional income has a more positive effect for more highly educated than for less educated women. For women with 0-8 years of education the effect of more income is positive when the family has no children but negative thereafter, but for college-educated women the effect of more income is positive. And additional income has a less positive (more negative) effect on fertility among nonwhites than among whites.     

The intergenerational transmission of fertility in contemporary Denmark: The effects of number of siblings (full and half), birth order,and whether male or female

Using the Danish Fertility Database, we investigate intergenerational fertility transmission, including the relationship between the number of children born to those aged 25 and 26 years in 1994 and the number of their full sibs and half-sibs. We find that the fertility behaviour of parents and their children is positively correlated, and that half-sibs and full sibs have broadly similar effects. We do not find, in this complete national population, the strong birth order effects reported in some earlier studies. Nor do we find evidence of a weakening of intergenerational fertility transmission over time, perhaps because the greater flexibility of lifestyles in this post-transitional phase provides the extended social space within which intergenerational continuities can manifest themselves. We show that members of large families are over-represented in subsequent generations - that they have far more kin than those from smaller families - and that intergenerational continuities in fertility behaviour play a substantial role in keeping fertility higher than it would be in the absence of such transmission.     

The intergenerational transmission of fertility in contemporary Denmark: the effects of number of siblings (full and half), birth order,and whether male or female

Using the Danish Fertility Database, we investigate intergenerational fertility transmission, including the relationship between the number of children born to those aged 25 and 26 years in 1994 and the number of their full sibs and half-sibs. We find that the fertility behaviour of parents and their children is positively correlated, and that half-sibs and full sibs have broadly similar effects. We do not find, in this complete national population, the strong birth order effects reported in some earlier studies. Nor do we find evidence of a weakening of intergenerational fertility transmission over time, perhaps because the greater flexibility of lifestyles in this post-transitional phase provides the extended social space within which intergenerational continuities can manifest themselves. We show that members of large families are over-represented in subsequent generations - that they have far more kin than those from smaller families - and that intergenerational continuities in fertility behaviour play a substantial role in keeping fertility higher than it would be in the absence of such transmission.     

The Intergenerational Effect and Second Childbirth: Survey Findings from the Shaanxi Province of China

Traditionally, the fertility behaviors of Chinese people have been deeply influenced by the entrenched patriarchal, patrilineal, and patrilocal systems. Women’s fertility decisions and behaviors are significantly influenced by their parents and parents-in-law. Given the current social changes with low fertility levels and intentions in China, it is still unclear about the actual link between the fertility behavior and the intergenerational effect. Therefore, we utilize data from 1577 questionnaires, conducted in 2013 in the Shaanxi Province of northwest China about fertility intentions and behaviors, and use the event history analysis method and the Cox proportional hazard model to explore the association between intergenerational effects and women’s second childbirths. “The number of the parental generation’s children” and “the living arrangements of the parental generation” are employed to measure the intergenerational effect. The findings show that there is an existence of intergenerational transmission of fertility between women of childbearing age and their parents-in-law, rather than their biological parents when considering the effects of their parents-in-law. In addition, the study finds a significant correlation between women’s second childbirth and the living arrangements of their parents-in-law, but no significant association with the living arrangements of their biological parents. These results support that the patriarchal, patrilineal, and patrilocal systems play a role in women’s fertility behaviors in contemporary China.     

Beyond Transmission: Intergenerational Patterns of Family Formation Among Middle-Class American Families

Research about parental effects on family behavior focuses on intergenerational transmission: that is, whether children show the same family behavior as their parents. This focus potentially overemphasizes similarity and obscures heterogeneity in parental effects on family behavior. In this study, we make two contributions. First, instead of focusing on isolated focal events, we conceptualize parents’ and their children’s family formation holistically as the process of union formation and childbearing between ages 15 and 40. We then discuss mechanisms likely to shape these intergenerational patterns. Second, beyond estimating average transmission effects, we innovatively apply multichannel sequence analysis to dyadic sequence data on middle-class American families from the Longitudinal Study of Generations (LSOG; N = 461 parent-child dyads). The results show three salient intergenerational family formation patterns among this population: a strong transmission, a moderated transmission, and an intergenerational contrast pattern. We examine what determines parents’ and children’s likelihood to sort into a specific intergenerational pattern. For middle-class American families, educational upward mobility is a strong predictor of moderated intergenerational transmission, whereas close emotional bonds between parents and children foster strong intergenerational transmission. We conclude that intergenerational patterns of family formation are generated at the intersection of macro-structural change and family internal psychological dynamics.     

Children in large families

A summary was provided of issues presented by Dr. Cynthia Lloyd in her chapter on investing in children from the 1994 volume "Population and Development: Old Debates, New Conclusions." Children in large families may miss the opportunities offered in a modernizing society. The possibilities for adverse consequences because of a large size of families include a smaller share of resources (time, income, and/or nutrition) among family members, limited access to public resources (health care and education), unequal distribution of resources among family members, and gender defined roles. Dr. Lloyd's review of the literature exposed the lack of emphasis on the impact of opportunity, equity, and intergenerational transfers on child welfare. Children's smaller share of resources had less impact on child welfare. Later-born and unwanted children were particularly vulnerable in large families. Unwanted children were usually later born or girls. The lack of investments in girl's education not only affected the limited earning power and opportunity to escape from gender restricting roles but also contributed to the perpetuation of the cycle of high fertility and gender discrimination. Family decisions about fertility and investments in children's education and nutrition can not be separated from the social context of culture, class, social custom, and level of socioeconomic development. Disadvantage is not assured in large families, but statistically more probable. Fewer children are more likely to be wanted and to receive better care. Societies should provide high quality family planning services, safe abortion services, and enforcement of primary school education requirements. Measures need to be adopted for promotion of schooling for girls that is sensitive to cultural norms. Laws must protect children's rights to economic support from both biological parents. Gender discrimination against women must be eliminated.     

Economic recession and fertility in the developed world

This article reviews research on the effects of economic recessions on fertility in the developed world. We study how economic downturns, as measured by various indicators, especially by declining GDP levels, falling consumer confidence, and rising unemployment, were found to affect fertility. We also discuss particular mechanisms through which the recession may have influenced fertility behavior, including the effects of economic uncertainty, falling income, changes in the housing market, and rising enrollment in higher education, and also factors that influence fertility indirectly such as declining marriage rates. Most studies find that fertility tends to be pro-cyclical and often rises and declines with the ups and downs of the business cycle. Usually, these aggregate effects are relatively small (typically, a few percentage points) and of short durations; in addition they often influence especially the timing of childbearing and in most cases do not leave an imprint on cohort fertility levels. Therefore, major long-term fertility shifts often continue seemingly uninterrupted during the recession—including the fertility declines before and during the Great Depression of the 1930s and before and during the oil shock crises of the 1970s. Changes in the opportunity costs of childbearing and fertility behavior during economic downturn vary by sex, age, social status, and number of children; childless young adults are usually most affected. Furthermore, various policies and institutions may modify or even reverse the relationship between recessions and fertility. The first evidence pertaining to the recent recession falls in line with these findings. In most countries, the recession has brought a decline in the number of births and fertility rates, often marking a sharp halt to the previous decade of rising fertility rates.     

Pay-as-you-go financed public pensions in a model of endogenous growth and fertility

Employing an overlapping generations endogenous growth model in which parents derive utility from having children and, additionally, expect children to support them in old age, this paper explores the interrelation between growth, fertility, and the size of pay-as-you-go financed public pensions. It is shown that small sized public pensions stimulate per capita income growth, but further increases in public pensions eventually reduce it. Fertility, on the other hand, falls by an increase in public pensions if they are either small or large. Medium sized public pensions, however, may stimulate fertility. Received: 9 September 1997 / Accepted: 10 April 1998     

A Multigenerational View of Inequality

The study of intergenerational mobility and most population research are governed by a two-generation (parent-to-offspring) view of intergenerational influence, to the neglect of the effects of grandparents and other ancestors and nonresident contemporary kin. While appropriate for some populations in some periods, this perspective may omit important sources of intergenerational continuity of family-based social inequality. Social institutions, which transcend individual lives, help support multigenerational influence, particularly at the extreme top and bottom of the social hierarchy, but to some extent in the middle as well. Multigenerational influence also works through demographic processes because families influence subsequent generations through differential fertility and survival, migration, and marriage patterns, as well as through direct transmission of socioeconomic rewards, statuses, and positions. Future research should attend more closely to multigenerational effects; to the tandem nature of demographic and socioeconomic reproduction; and to data, measures, and models that transcend coresident nuclear families.     

The transmission of women’s fertility, human capital, and work orientation across immigrant generations

Using the 1995–2011 March Current Population Survey and 1970–2000 Census data, we find that the fertility, education, and labor supply of second-generation women (US-born women with at least one foreign-born parent) are significantly positively affected by the immigrant generation’s levels of these variables, with the effect of the fertility and labor supply of women from the mother’s source country generally larger than that of women from the father’s source country and the effect of the education of men from the father’s source country larger than that of women from the mother’s source country. We present some evidence that suggests our findings for fertility and labor supply are due at least in part to intergenerational transmission of gender roles. Transmission rates for immigrant fertility and labor supply between generations are higher than for education, but there is considerable intergenerational assimilation toward native levels for all three of these outcomes.     

Intergenerational education mobility of black and white South Africans

Using the October Household Surveys, we found that the intergenerational education mobility of whites is higher than that of blacks. Among blacks, females have a higher intergenerational education mobility than males, while the poorest have the lowest intergenerational education mobility. The lower education mobility of blacks than that of whites indicate that factors such as access to the credit market, as well as the availability and quality of schools, are important determinants of educational attainment. Interestingly, the cross section estimates of black intergenerational education mobility do not differ from those obtained by using pseudopanel data, which control for unobserved community effects. The views expressed here are those of the author and should not be associated with the African Development Bank, their members, or the countries they represent.