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 studies the macroeconomic consequences of family policies in a heterogeneous-agent overlapping generations model featuring endogenous fertility and child investments, a multi-period demographic structure, and childcare choices. I calibrate the model to U.S. data and validate the fertility elasticities using design-based evidence. I find that cash rewards for childbirth raise fertility at the expense of human capital and intergenerational mobility. The key mechanisms for this result are the quantity-quality trade-off within households and heterogeneous fertility responses across households. Interestingly, average welfare rises in the long run as the old-age dependency ratio drops, requiring lower taxes to sustain retirement benefits.

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