Changes in Wages and Gender Reaction: Difference between revisions
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''What does economic theory predict will happen to the fertility rate (the number of children born per adult female) if women’s wages continue to rise in the next 40 years?'' | |||
This is the classic case that [[Thomas Malthus]] screwed up. He (correctly) noted that there is an income effect associated with increases in wages, which tends to make adults want to have more children – children are a normal good just like most other things, in the sense that the more money you have the more kids you want to “buy”. However, there is a substitution effect here, because as the price of an hour spent at home taking care of kids (i.e., the wage) increases, people want to have fewer kids. Incomes rising plus the price of kids rising ? ambiguous effects on the fertility rate. | |||
Revision as of 00:31, 9 April 2006
we have a stupid title
What does economic theory predict will happen to the fertility rate (the number of children born per adult female) if women’s wages continue to rise in the next 40 years? This is the classic case that Thomas Malthus screwed up. He (correctly) noted that there is an income effect associated with increases in wages, which tends to make adults want to have more children – children are a normal good just like most other things, in the sense that the more money you have the more kids you want to “buy”. However, there is a substitution effect here, because as the price of an hour spent at home taking care of kids (i.e., the wage) increases, people want to have fewer kids. Incomes rising plus the price of kids rising ? ambiguous effects on the fertility rate.
