Introduction: Having a baby makes me more exposed to children-related economic research. Or, perhaps it is the reverse: having been exposed to children-related research makes me (want to be) having a baby. Nevermind. Here are some literature review of some research in the topic.
Why do people decide to have kids? Is it driven by preference or constraint? Earlier, I raised the debate between the 'family-planning' vs. 'desired demand' hypothesis of fertility. The former argued that people have (many) children because of constrained access to contraceptive. The latter argued that people have many children because they do want to have many children.
I'm leaning towards the 'desired demand' hypothesis. Having children is a rational choice (although for some people, it may be an 'accident' - no judgement on that). Rational means parents calculate the benefits of having kids compared to its costs. The benefts and costs do not have to be perfectly known, nor they should always be measured in financial terms. The bottom line is, economic theory also allows us to predict human behavior in terms of fertility decision.
What's behind the demand (desire) to have kids? In Indonesia, we know the term 'more children, more prosper' ('banyak anak banyak rejeki'). Behind the old saying, there are economic rationales.
First, old-age security. Parents expect their children to take care of them when they are old. Missing market, in this case the market of pension fund and senior citizen care gives the reason for this view.
Second, family (cheap) labor, usually for rural agriculture households. Again, this happens because of the missing or imperfect market for labor, as well as market for goods; so households will have to rely on own production.
Hence, missing markets help explain why people have many children.
In addition to that, parents may decide to have many kids to increase the number of survived kids. This may happen when the health situation and infrastructure is poor. By having many kids, parents can achive their 'targeted' number of kids. Lastly, number of children may also be affected by gender preference. The probability of having a second, third and next child is greater if parents has a preference over a certain gender (more on this).
Childrenomics | Fertility
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