MICROECONOMIC THEORY OF FERTILITY
COMPARATIVE STATICS
1. rise in income: parallel shift... more consumption of both, higher indifference curve
Other goods
B
A
Number of children
2. rise in price of children (i.e. increasing opportunity cost of mom through econ. dev.)
lowers number of children
steeper budget line, lower indifference curve
Other goods
A
B
Number of children
3. As countries with high population growth rates develop, it may be desirable to increase
income while lowering population growth and increasing utility. Is this possible using
fertility theory? YES, but only under special circumstances: Suppose that income
increases AND the price of children becomes higher. Depending on the way we draw the
graph (how far we shift the curve, how steep we draw it, the shape of the indifference
curve), it is POSSIBLE have greater income, fewer children, and a higher indifference
curve:
Other goods
B
A
Number of children
However, it is also possible to draw the graph with greater income and MORE children if
income increases alot:
Other goods
B
A
Number of children
Alternatively, if the price of children increased alot, and income increased marginally, it
might be possible to have fewer children but be on a lower indifference curve.