Bargaining over Babies

It takes a woman and a man to make a baby. This observation suggests that for a birth to take place, both parents should agree that they are better off with another child. In this paper, we first show empirically that agreement between the parents indeed makes a birth much more likely. We then build a bargaining model of fertility choice and calibrate the model to data on fertility preferences and realized fertility. The quantitative model can be used to examine how policies such as child subsidies and public provision of child care affect childbearing. Unlike a theory that abstracts from bargaining, our analysis shows that the distribution of benefits among mothers and fathers is the key determinant of a policy’s impact on fertility.