Intergenerational Mobility Begins Before Birth

with Ananth Seshadri

Journal of Monetary Economics, Volume 129, July 2022 (lead article)

The Macroeconomic Consequences of Family Policies

Abstract: This paper develops a heterogeneous-agent overlapping generations model to study the macroeconomic consequences of family policies. The model integrates the quantity-quality trade-off, a multi-period demographic structure, and childcare choices. I calibrate the model to U.S. data and estimate the fertility elasticities using the Alaska Permanent Fund Dividend (APFD). I find that raising aggregate fertility to the replacement level requires a $30,000 cash reward for childbirth, but such a policy reduces average human capital and intergenerational mobility. Nevertheless, average well-being rises by 1.6% in the long run as the old-age dependency ratio drops, requiring lower taxes to sustain retirement benefits. Compared with cash rewards, in-kind benefits are less cost-effective in raising fertility but have other advantages: subsidized childcare encourages parents to work, while expansions of public education improve children's human capital and intergenerational mobility.

Bounding Fertility Elasticities

Abstract: I propose a technique for bounding the fertility elasticity, i.e., the magnitude of fertility responses to changes in the cost of children. I show that a bound can be derived under mild assumptions for any country and year with minimal information required. Overall, the range is consistent with empirical estimates and is more precise than current meta-analyses. The bound imposes additional restrictions on parameters in models with endogenous fertility. Furthermore, it provides a transparent evaluation of the exogenous fertility assumption that is widely used in structural models studying child-related policies.

Decomposing Fertility Changes: A Tale of Three Elasticities

Trade, Fertility, and Education: The Family Connection Redux

with Ananth Seshadri