nep-dem New Economics Papers
on Demographic Economics
Issue of 2018‒04‒16
seven papers chosen by
Héctor Pifarré i Arolas
Max-Planck-Institut für demografische Forschung

  1. The Effect of Abortion Legalization on Fertility, Marriage and Long-term Outcomes for Women By Libertad González; Sergi Jiménez-Martín; Natalia Nollenberger; Judit Vall Castello
  2. Instrumental variables based on twin births are by definition not valid By Öberg, Stefan
  3. Social capital, human capital and fertility By Coppier, Raffaella; Sabatini, Fabio; Sodini, Mauro
  4. Early retirement decisions: Lessons from a dynamic structural modelling By Eric Delattre; Richard Moussa
  5. Inflation and Fertility in a Schumpeterian Growth Model: Theory and Evidence By He, Qichun
  6. Aging, Secular Stagnation and the Business Cycle By Callum Jones
  7. The Retirement-Consumption Puzzle: New Evidence from Personal Finances By Arna Olafsson; Michaela Pagel

  1. By: Libertad González; Sergi Jiménez-Martín; Natalia Nollenberger; Judit Vall Castello
    Abstract: We evaluate the short- and long-term effects for women of access to subsidized, legal abortion by exploiting the Spanish legalization of abortion in 1985. Using birth records and survey data, we find robust evidence that the legalization led to an immediate decrease in the number of births to women aged 21 and younger. This effect was driven by provinces with a higher supply of abortion services. In those regions, young women affected by the reform were also less likely to marry. Using data from the Labor Force Survey and exploiting the rollout of abortion clinics across provinces and over time, we find evidence that the affected cohorts of women, who were able to postpone fertility as a result of the legalization of abortion, achieved higher educational attainment and had higher life satisfaction 20 years after the reform. We do not find evidence of increases in the probability of being employed.
    Date: 2018–04
  2. By: Öberg, Stefan (Department of Economic History, School of Business, Economics and Law, Göteborg University)
    Abstract: Instrumental variables based on twin births are a well-known and widespread method to find exogenous variation in the number of children when studying the effect on siblings or parents. This paper argues that there are serious problems with all versions of these instruments. Many of these problems have arisen because insufficient care has been given to defining the estimated causal effect. This paper discusses this definition and then applies the potential outcomes framework to reveal that instrumental variables based on twin birth violate the exclusion restriction, the independence assumption and one part of the stable unit treatment value assumption. These violations as well as the characteristics of the populations studied have contributed to hiding any true effect of the number of children. It is time to stop using these instrumental variables and to return to these important questions using other methods.
    Keywords: causal inference; natural experiments; local average treatment effect; complier average causal effect; Rubin’s causal model; quantity–quality trade-off; family size
    JEL: C21 C26 J13
    Date: 2018–04–01
  3. By: Coppier, Raffaella; Sabatini, Fabio; Sodini, Mauro
    Abstract: Abstract We develop an overlapping generations model to study how the interplay between social and human capital affects fertility. In a framework where families face a trade-off between the quantity and quality of children, we incorporate the assumption that social capital plays a key role in the accumulation of human capital. We show how the erosion of social capital can trigger a chain of reactions leading households to base their childbearing decisions on quantity, instead of quality, resulting in higher fertility.
    Keywords: fertility, quantity-quality trade-off, human capital, education, social capital, trust
    JEL: I25 J13 Z0 Z13
    Date: 2018–03–11
  4. By: Eric Delattre; Richard Moussa (Université de Cergy-Pontoise, THEMA)
    Abstract: Early retirement has many causes according to economic and sociological literature. These causes may be the preference for leisure, nancial and health conditions, and social environment. In our paper, we aim to specify and estimate an econometric model to assess the early retirement decision-making process for aged workers. We specify a worker's utility function from which we derive worker's probability to retire earlier that depends on her health stock, estate value and preference for future. We also estimate an health production and an health consumption functions that are key factors in the individual's decision to retire earlier. Thus, we show that our model disentangles between three groups of workers: (i) those who choose early retirement, (ii) those who will never choose early retirement and (iii) those who are uncertain about early retirement. We also show that our predicted early retirement probability is a good predictor of early retirement as it is causal for observed early retirement.
    Keywords: Early retirement, Grossmann Model, Space-state model, Causality
    JEL: C32 C51 I12 J26
    Date: 2018
  5. By: He, Qichun
    Abstract: This study explores a novel channel for monetary policy to impact growth and welfare---through fertility choice. In a scale-invariant Schumpeterian growth model with endogenous fertility and a cash-in-advance constraint on consumption, we find a positive effect of an increase in the nominal interest rate on fertility. The increase in fertility decreases labor supplied to production and R&D, which in turn decreases long-run growth. Calibration shows that long-run growth increases 0.12% by reducing the nominal interest rate from 9.6% to 0%, and the welfare gain is equivalent to a permanent increase in consumption of 3.14%. As an empirical test, we build panel data for 12 advanced countries during 2000--2014. We use the degree of central bank independence and money growth as the instruments for inflation. We find that the effect of inflation on population growth is positive and significant in instrumental variables estimation. Our results remain robust to using birth rate or fertility rate as the dependent variable. An increase in annual inflation of 1 percentage point would bring an increase of 0.06 percentage point in the annual growth of the total population. Our empirical findings provide support for our theory.
    Keywords: Monetary policy; fertility; economic growth; panel data
    JEL: J1 O31 O42
    Date: 2018–03
  6. By: Callum Jones
    Abstract: As of 2015, U.S. log output per capita was 12 percent below what its pre-2008 linear trend would predict. To understand why, I develop and estimate a model of the US with demographics, real and monetary shocks, and the occasionally binding ZLB on nominal rates. Demographic changes generate slow-moving trends in the real interest rate, employment, and productivity. I find that demographics alone can explain one-third of the gap between log output per capita and its linear trend in 2015. Demographics also lowered real rates, causing the ZLB to bind between 2009 and 2015, contributing to the slow recovery after the Great Recession.
    Date: 2018–03–23
  7. By: Arna Olafsson; Michaela Pagel
    Abstract: This paper uses a detailed panel of individual spending, income, account balances, and credit limits from a personal finance management software provider to investigate how expenditures, liquid savings, and consumer debt change around retirement. The longitudinal nature of our data allows us to estimate individual fixed-effects regressions and thereby control for all selection on time-invariant (un)observables. We provide new evidence on the retirement-consumption puzzle and on whether individuals save adequately for retirement. We find that, upon retirement, individuals reduce their spending in both work-related and leisure categories. However, we feel that it is difficult to tell conclusively whether expenses are work related or not, even with the best data. We thus look at household finances and find that individuals delever upon retirement by reducing consumer debt and increasing liquid savings. We argue that these findings are difficult to rationalize via, for example, work-related expenses. A rational agent would save before retirement because of the expected fall in income, and dissave after retirement, rather than the exact opposite
    JEL: D12 D14 E21 J26 J32
    Date: 2018–03

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