nep-dem New Economics Papers
on Demographic Economics
Issue of 2024‒02‒26
four papers chosen by
Héctor Pifarré i Arolas, University of Wisconsin

  1. Declining fertility, human capital investment, and economic sustainability By Mikko Myrskylä; Julia Hellstrand; Sampo Lappo; Angelo Lorenti; Jessica Nisén; Ziwei Rao; Heikki Tikanmäki
  2. Education, Gender, and Family Formation By Virtanen, Hanna; Silliman, Mikko; Kuuppelomäki, Tiina; Huttunen, Kristiina
  3. Baby Bumps in the Road: The Impact of Parenthood on Job Performance, Human Capital, and Career Advancement By Healy, Olivia; Heissel, Jennifer A.
  4. Complexity and Hyperbolic Discounting By Benjamin Enke; Thomas Graeber; Ryan Oprea; Thomas W. Graeber

  1. By: Mikko Myrskylä (Max Planck Institute for Demographic Research, Rostock, Germany); Julia Hellstrand (Max Planck Institute for Demographic Research, Rostock, Germany); Sampo Lappo; Angelo Lorenti (Max Planck Institute for Demographic Research, Rostock, Germany); Jessica Nisén (Max Planck Institute for Demographic Research, Rostock, Germany); Ziwei Rao; Heikki Tikanmäki
    Abstract: Future fertility is a key input when charting the sustainability of social security systems, and declining fertility is often expected to put pressure on economic indicators such as pension burden. Such expectations are based on a narrow view of the impact of fertility on the economy, focusing on age structure. Dynamic impacts – for instance, the potential for increased human capital of smaller cohorts – are mostly ignored. We use a dynamic longitudinal microsimulation model to explore to what extent investments in human capital could offset the adverse economic impact of low fertility. We implement our model in the Finnish context, which is a particularly interesting case as Finland is the fastest-ageing European country and experienced dramatic fertility declines and stagnant education levels in the 2020s. We find that an ambitious but simple human capital investment strategy that keeps the total investment constant despite declining cohort size, thereby increasing per-capita investment, can offset the negative impact of a smaller labor force on pension burden. Human capital investment not only reduces pension burden, but also increases working years, pension income, retirement years, and longevity. Policies focusing on human capital investment are likely to be a viable strategy to maintain economic sustainability. Keywords: low fertility, human capital investment, economic sustainability, Finland, dynamic longitudinal microsimulation model
    JEL: J1 Z0
    Date: 2024
  2. By: Virtanen, Hanna; Silliman, Mikko; Kuuppelomäki, Tiina; Huttunen, Kristiina
    Abstract: Abstract In response to the wide-ranging consequences of falling fertility rates, governments across high-income countries are considering how to increase rates of family formation. Despite significant scientific interest, there remains limited empirical evidence on how education shapes family choices across the life cycle. We study the effect of educational attainment on family formation using regression discontinuity designs generated by centralized admissions processes to both secondary and tertiary education in Finland. At both margins, admission to further education increases the probability that women form families – i.e. have children or find a partner. For men, our point estimates are near zero for all outcomes, and sometimes negative. These results contrast a common perception that educational attainment makes it harder for women to form families and men more attractive as potential partners. The positive effects on female fertility may be attributed to education improving the compatibility of work and family. Additionally, as higher-order skills are increasingly important in the labor market, and parental inputs are important in shaping these skills, these results align with the notion that education may make women more attractive as potential spouses.
    Keywords: Education, Gender, Family formation, Fertility, Cohabiting, Marriage
    JEL: J13 I26
    Date: 2024–02–06
  3. By: Healy, Olivia (Elon University); Heissel, Jennifer A. (Naval Postgraduate School)
    Abstract: This paper explores whether and why a maternal "child penalty" to earnings would emerge even without changes in employment and hours worked. Using a matched event study design, we trace monthly changes in determinants of wages (job performance, human capital accumulation, and promotions). Data come from a usefully unusual setting with required multiyear employment and detailed personnel data: the United States Marine Corps. Mothers' job performance initially declines, and gaps in promotion grow through 24 months postbirth. Fathers' physical fitness performance drops somewhat but recovers. These patterns lead mothers to earn relatively lower wages, even absent changes in employment postbirth.
    Keywords: parenthood, child penalty, gender wage gap, promotion
    JEL: J24 J16 J18 J45
    Date: 2024–01
  4. By: Benjamin Enke; Thomas Graeber; Ryan Oprea; Thomas W. Graeber
    Abstract: A large literature shows that people discount financial rewards hyperbolically instead of exponentially. While discounting of money has been questioned as a measure of time preferences, it continues to be highly relevant in empirical practice and predicts a wide range of real-world behaviors, creating a need to understand what generates the hyperbolic pattern. We provide evidence that hyperbolic discounting reflects mistakes that are driven by the complexity of evaluating delayed payoffs. In particular, we document that hyperbolicity (i) is strongly associated with choice inconsistency and cognitive uncertainty, (ii) increases in overt complexity manipulations and (iii) arises nearly identically in computationally similar tasks that involve no actual payoff delays. Our results suggest that even if people had exponential discount functions, complexity-driven mistakes would cause them to make hyperbolic choices. We examine which experimental techniques to estimate present bias are (not) confounded by complexity.
    Keywords: hyperbolic discounting, present bias, bounded rationality, cognitive uncertainty
    JEL: C91 D91 G00
    Date: 2023

This nep-dem issue is ©2024 by Héctor Pifarré i Arolas. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.