A constitutional theory of the family

The paper re-examines the idea that a family can be viewed as a community governed by a self-enforcing constitution, and extends existing results in two directions. First, it identifies the circumstances in which a constitution is renegotiation-proof. Second, it introduces parental altruism. The behavioural and policy implications are illustrated by showing the effects of public pensions and credit rationing. These implications are not much affected by whether altruism is assumed or not, but contrast sharply with those of more conventional models.

A sequential probability model of fertility patterns

The present paper analyses the fertility histories of a sample of women within a stochastic framework. Recognising the sequential nature of reproductive decisions, the probability that a birth will occur at any given date is related to the realisations of past decisions and to all new information accrued since the last decision date, as well as to the characteristics of the potential mother. Time series are combined with survey data to provide information about the changing economic environment facing all women in the sample. The results of the analysis show the effects of wage rates, child benefits and various personal characteristics on birth probability profiles. The conclusions of the econometric analysis are related to existing theory and to the results of other empirical studies of the economic factors affecting the timing and spacing of births.Thanks are due to Ermisch, Jurgen Doornik and anonymous referees for helpful comments, to Mrs Su Spencer for careful typing and also to the ESRC Data Archive for making available the data. All errors are, of course, ours.     

Self-enforcing family rules,marriage and the (non)neutrality of public intervention

We demonstrate that the notion of a family ‘constitution’ (self-enforcing, renegotiation-proof norm) requiring adults to provide attention for their elderly parents carries over from a world where identical individuals reproduce asexually, to one where individuals differentiated by sex and preferences marry, have children and bargain over the allocation of domestic resources. In this heterogenous world, couples are sorted by their preferences. If a couple’s common preferences satisfy a certain condition, the couple have an interest in instilling those preferences into their children. Policies are generally nonneutral. In particular, wage redistribution may raise, and compulsory education will reduce, the share of the adult population that is governed by family constitutions, and thus the share of the elderly population who receive attention from their children.     

Fertility decisions when infant survival is endogenous

There is evidence that fertility is positively correlated with infant mortality, and that a child‘s chance of surviving to maturity increases with the level of nutrition, medical care, etc. received in the early stages of life. By modelling parental decisions as a problem of choice under uncertainty, the paper shows that fertility and infant mortality are most likely to move in opposite directions if, as implicitly assumed by existing economic theories, parents believe that there is nothing they can do to improve the survival chances of their own children. By contrast, if parents realize that those chances improve with the amount they spend for the health, nutrition, etc. of each child that they put into the world, then fertility and infant mortality may move in the same direction. Under such an assumption, the model has the strong policy implication that directly death-reducing public expenditures are most effective, but stimulate population growth, at low levels of development. By contrast, at high levels of development, such expenditures tend to crowd out parental expenditures, and are a factor in fertility decline. Received: 14 October 1996 / Accepted: 28 July 1997     

A seamless service: meeting the needs of children with disabilities through a multi-agency approach

Recent research and child care legislation has brought about a change in emphasis in services for families where there is a child with disabilities. The multi-disciplinary approach, where different agencies and professionals work together to provide a holistic service, has become of paramount importance. This study reports the results of an evaluation of a multi-agency Children's Centre which was attempting to put the rhetoric into practice. A multi-method research design, incorporating quantitative and qualitative techniques, was used. The main aim was to assess how far the Centre was carrying out an integrated approach in order to meet the needs of children and carers. The results indicate that while staff felt that there was still some way to go to provide a seamless service, the vast majority of parents felt that the Centre did meet its aims. While the reasons for these differences are explored, and the authors caution against complacency, the overall conclusion is that there is evidence that professionals can successfully work together in close proximity with one shared aim; and that such multi-agency centres work for families.     

Marriage as a commitment device

Non-cooperative couples are inefficient. Cooperation raises the utility of both parents, and of each child, but does not guarantee efficiency. In the presence of credit rationing, a cooperative equilibrium may not exist outside marriage, because the main earner cannot credibly promise to compensate the main childcarer at some future date, and may not be able or willing to do so at front. By allowing the main childcarer to credibly threaten divorce if the main earner does not deliver the promised compensation when the time comes, marriage makes that promise credible, and thus increases the probability that a cooperative equilibrium will exist. In a separate-property jurisdiction, a reduction in the cost or difficulty of obtaining a divorce increases married women??s participation in the labour market. In a community-property one, it has no such effect.     

Is there such a thing as a family constitution? A test based on credit rationing

The paper tests the hypothesis that private transfers can be explained by the existence of self-enforcing family constitutions prescribing the minimum level at which a person in middle life should support her young children and elderly parents. The test is based on the effect of a binding credit ration on the probability of making a money transfer, which can be positive only in the presence of family constitutions. Allowing for the possible endogeneity of the credit ration, we find that rationing has a positive effect on the probability of giving money if the potential giver is under the age of retirement, but no significant effect if the person is already retired. This appears to reject the hypothesis that transfer behavior is the outcome of unfettered individual optimization on the part of either altruistic or exchange motivated agents, but not the one that individuals optimize subject to a self-enforcing family constitution. The policy implications are briefly discussed.

The effects of financial markets and social security on saving and fertility behaviour in Italy

The paper aims to ascertain the extent to which saving and fertility decisions are affected by the availability and attractiveness of market-based or state-provided alternatives to the family as a source of old-age support. Subordinately, the paper aims to bring evidence to bear on the assumption that fertility is endogenous and jointly determined with saving, and to test two alternative hypotheses about individual motivations. The saving and fertility implications of two alternative models of family choice — based one on the assumption of pure self-interest, the other on that of intergenerational altruism — are first derived theoretically. Saving and fertility equations are then estimated from Italian time-series data, using as explanatory variables the market rate of interest, the social security deficit, various measures of capital market accessibility and social security coverage, and a number of income and wage variables. Particularly worthy of note is the result that a fully-funded increase in social security coverage raises saving, while an increase in the social security deficit has the opposite effect. The empirical findings appear to support the assumption that fertility is endogenous and jointly determined with saving, and to favour the hypothesis that individual decisions are motivated by self-interest rather than intergenerational altruism. Some of the policy implications are briefly discussed in the concluding section.While retaining responsibility for any errors, the authors wish to thank Carlo Casarosa, Wolfram Richter, Ed Wolff and three anonymous referees for helpful comments. Financial support from MURST 40%, under national project Capitale, Capitale Umano, Sicurezza Sociale e Dinamiche Demografische Endogene, is gratefully acknowledged.     

Cost of Children,Parental Decisions,and Family Policy

ABSTRACT: The aims and means of family policy are examined in the light of standard economic theory, and of the microeconomics of fertility. It is shown that compensating parents for the cost of having children is unjustified, and that such a cost is not captured by the methods commonly used to estimate it anyway. On the other hand, a family policy may be justified if fertility or parental expenditures on children are‘'too small'’(or‘'too large”) as a result of externalities or market incompleteness; if some couples are physically rationed in their fertility decisions; or in order to relieve poverty. Manipulating taxes on parental earnings and child-specific goods is generally preferable to changing child benefits rates.