Two-Sided Altruism: Do Inter-Generational Transfers Trigger Greater Childbearing in Developing Countries?

Shonel Sen, Pennsylvania State University

Social, economic and institutional characteristics differ greatly between developing countries but we can identify some common factors that may cause high levels of childbearing and rapid population growth. This paper incorporates child labour and old age security into the dynamic Quantity-Quality model of fertility and extends the study to 3 time periods and 3 generations with bi-directional transfers. Earlier literature focuses on how more children may lead to lower investments in child quality but the current analysis examines the reverse direction of causality by constructing a structural OLG model with a dynastic utility function for the household decision making unit. Preliminary results suggest that increasing child quality may in the long run reduce the demand for quantity as income-earning potential and the probability of survival to adulthood for children increases, this in turn will offset the parent’s propensity to have greater number of children to recompense for future uncertainty.