A THEORY OF ENDOGENOUS FERTILITY WITH OCCUPATIONAL CHOICE

This paper introduces endogenous fertility into a model of occupational choice, and studies its steady states. Three main results are obtained. First, despite the presence of both income and substitution eects in fertility choice, general equilibrium eects operating via endogenous wages in steady state yield a negative correlation between parental wages and fertility. (b) Occupational mobility arises in steady state, generated by dierential fertility across various occupational categories. Unlike the mobility created by stochastic shocks, such occupational drift has a predictable direction depending on the income-fertility relationship. (c) Steady states are locally determinate, permitting the analysis of the long-run eects of altering child-care or education costs, child labor regulations, redistributive tax-transfer policies and family planning subsidies.