nep-dem New Economics Papers
on Demographic Economics
Issue of 2023‒10‒02
four papers chosen by
Héctor Pifarré i Arolas, University of Wisconsin

  1. Reconciling estimates of the long-term earnings effect of fertility By Simon Bensnes; Ingrid Huitfeldt; Edwin Leuven
  2. The Child Penalty Atlas By Henrik Kleven; Camille Landais; Gabriel Leite-Mariante
  3. Population Aging and Income Inequality in a Semi-Endogenous Growth Model By Kazuo Mino; Hiroaki Sasaki
  4. Internal Migration, Remittances and Economic Development By Xiameng Pan; Chang Sun

  1. By: Simon Bensnes; Ingrid Huitfeldt; Edwin Leuven (Statistics Norway)
    Abstract: This paper presents novel methodological and empirical contributions to the child penalty literature. We propose a new estimator that combines elements from standard event study and instrumental variable estimators and demonstrate their relatedness. Our analysis shows that all three approaches yield substantial estimates of the long-term impact of children on the earnings gap between mothers and their partners, commonly known as the child penalty, ranging from 11 to 18 percent. However, the models not only estimate different magnitudes of the child penalty, they also lead to very different conclusions as to whether it is mothers or partners who drive this penalty – the key policy concern. While the event study attributes the entire impact to mothers, our results suggest that maternal responses account for only around one fourth of the penalty. Our paper also has broader implications for event-study designs. In particular, we assess the validity of the event-study assumptions using external information and characterize biases arising from selection in treatment timing. We find that women time fertility as their earnings profile flattens. The implication of this is that the event-study overestimates women’s earnings penalty as it relies on estimates of counterfactual wage profiles that are too high. These new insights in the nature of selection into fertility show that common intuitions regarding parallel trend assumptions may be misleading, and that pre-trends may be uninformative about the sign of the selection bias in the treatment period.
    Keywords: Child penalty; female labor supply; event study; instrumental variable
    JEL: C36 J13 J16 J21 J22 J31
    Date: 2023–08
  2. By: Henrik Kleven; Camille Landais; Gabriel Leite-Mariante
    Abstract: This paper builds a world atlas of child penalties in employment based on micro data from 134 countries. The estimation of child penalties is based on pseudo-event studies of first child birth using cross-sectional data. The pseudo-event studies are validated against true event studies using panel data for a subset of countries. Most countries display clear and sizable child penalties: men and women follow parallel trends before parenthood, but diverge sharply and persistently after parenthood. While this qualitative pattern is pervasive, there is enormous variation in the magnitude of the effects across different regions of the world. The fraction of gender inequality explained by child penalties varies systematically with economic development and proxies for structural transformation. At low levels of development, child penalties represent a minuscule fraction of gender inequality. But as economies develop — incomes rise and the labor market transitions from subsistence agriculture towards salaried work in industry and services — child penalties take over as the dominant driver of gender inequality. Because parenthood is often tied to marriage, we also investigate the existence of marriage penalties in female employment. In general, women experience both marriage and child penalties, but their relative importance depends on economic development. The development process is associated with a substitution from marriage penalties to child penalties, with the former gradually converging to zero.
    JEL: D13 D30 J12 J13 J16 J21 J22 O12
    Date: 2023–08
  3. By: Kazuo Mino (Institute of Economic Research, Kyoto University); Hiroaki Sasaki (Graduate School of Economics, Kyoto University)
    Abstract: Using a continuous-time overlapping generations model with semi-endogenous growth, this study examines the impact of population aging on inequality. We characterize the stationary distribution of income and wealth among households and investigate how an increase in life expectancy and a decrease in birth rate affect the distributional profile. The numerical experiments revealed that an increase in life expectancy lowers inequality, whereas a decrease in birth rate increases inequality. We also consider extended models with exogenous productivity growth, agents' retirement from labor participation, and endogenous labor supply.
    Keywords: population aging, semi-endogenous growth, overlapping generations model, income and wealth inequality, Pareto distribution
    JEL: E2 O4
    Date: 2023–09
  4. By: Xiameng Pan; Chang Sun
    Abstract: We develop a quantitative spatial equilibrium model with endogenous migration and remittance decisions within households to examine the joint effect of migration and remittances on economic development. We apply the model to internal migration in China. Counterfactual analysis of the calibrated model shows that the presence of remittances increases migration and welfare, reduces regional inequality and facilitates structural change. Compared to a conventional single-person migration model, our household model suggests a larger reduction in regional inequality and stronger reallocation of employment from agriculture to manufacturing and services in response to the decline in migration costs over the period of 2000 to 2010.
    Keywords: remittances, migration, structural change, spatial equilibrium
    JEL: O10 R10 R20
    Date: 2023

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