Female labor supply, fertility rebounds, and economic development

Abstract

Abstract We show that a fertility rebound can occur as the female wage rate rises concomitantly 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, the fertility rate starts to decline at a certain level of the female wage rate and then turns upward at a higher wage level, presenting a fertility rebound. For such fertility rebounds to appear without policy intervention, the availability of external child care at high female wage rates is crucially important. The external child‐care price must be lower at high female wage rates. Otherwise the fertility rate might continue to decline.

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