Female labor supply, fertility rebounds, and economic development

• DOI: http://doi.org/10.1111/rode.12411
• Published date: 01 November 2018
• Date: 01 November 2018
• Author: Akira Yakita

REGULAR ARTICLE

Female labor supply, fertility rebounds, and

economic development

Akira Yakita

Nanzan University, Nagoya, Japan

Correspondence

Akira Yakita, Faculty of Economics,

Nanzan University, 18 Yamasato-cho,

Showa-ku, Nagoya 466-8673, Japan.

Email: yakita@nanzan-u.ac.jp

Funding information

the Japan Society for the Promotion of

Science KAKENHI, Grant/Award

Number: 16H03635

Abstract

We show that a fertility rebound can occur as the female

wage rate rises concomitantly with economic develop-

ment. 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.

1

|

INTRODUCTION

Fertility rebounds have been observed at higher levels of per-capita income in economically devel-

oped countries in recent decades, although the magnitudes of such rebounds vary among coun-

tries.

1

This fact contrasts against the so-called “stylized fact”that fertility declines at more

advanced stages of economic development (e.g., Galor & Weil, 1996; Galor, 2005). One convinc-

ing explanation of the rebounds is that they are the effect of family policies undertaken especially

after the 1990s (e.g., Luci-Greulich & Th

evenon, 2013). This paper presents a proposal for the

possibility of fertility rebounds without such policies, particularly addressing time-allocation deci-

sions of women and the availability of child care outside the home along with the level of eco-

nomic development.

Galor and Weil (1996) assume a physical factor of male labor which does not exist in female

labor. Men supply both physical and non-physical (mental) factors indivisibly as a unit of labor.

Because the male wage rate is higher than the female wage rate, women first spend their time on

child rearing at home; then men might do so also. Physical capital accumulation raises both female

and male wage rates, that is, the opportunity cost of child rearing at home. Incorporating the

DOI: 10.1111/rode.12411

Rev Dev Econ. 2018;22:1667–1681. wileyonlinelibrary.com/journal/rode ©2018 John Wiley & Sons Ltd

|

1667