Complements Versus Substitutes And Trends In Fertility Choice In Dynastic Models

The Barro-Becker model is a simple intuitive model of fertility choice. In its original formulation, however, it has not been very successful at reproducing the changes in fertility choice in response to decreased mortality and increased income growth that demographers have emphasized in explaining the demographic transition. In this paper the authors show that this is due to an implicit assumption that number and utility of children are complements, which is a byproduct of the high Intertemporal Elasticity of Substitution (IES) typically assumed in the fertility literature.