Motivation and Preliminaries
Model and Results
Who Owns Children and Does It Matter?
Alice Schoonbroodt1
1 University
Michèle Tertilt2
of Southampton
2 Stanford
University
SED, July 2008
Schoonbroodt and Tertilt (2008)
Property Rights 1
Motivation and Preliminaries
Model and Results
Motivation
Preliminaries
Motivation: Shift in “rights over children”
Then (before 1900 in various U.S. states):
Parents have rights
1601: English Poor Law: children must support parents.
1646: A stubborn son shall be put to death.
1793: Parents get benefits from child’s services as an apprentice.
1846: Parents cannot abandon child under age six.
1852: Poverty exception to compulsory schooling law.
Parents effectively “own” children and their labour income.
Schoonbroodt and Tertilt (2008)
Property Rights 2
Motivation and Preliminaries
Model and Results
Motivation
Preliminaries
Motivation: Shift in “rights over children”
Transition (1900 to 1940 in various U.S. states):
1906: Georgia prohibits child labour under age 12, unless
dependent parents, strictly no child labour under age 10
1916: Congress passes the Keating-Owen Act, the first federal
child labour law
1923: California added prison sentence to monetary penalty for
child neglect
1933: Congress passes National Recovery Act codes, which
prohibits child labour under age 16
1935: Social Security Act passed (Aid to Dependent Children and
Federal Pension)
1938: Every state had passed laws which “effectively banned
child labour and enforced compulsory schooling”
Children’s rights improve
Schoonbroodt and Tertilt (2008)
Property Rights 3
Motivation and Preliminaries
Model and Results
Motivation
Preliminaries
Motivation: Shift in “rights over children”
Now (1950 and after in various U.S. states):
Children have rights
1972: Minors can give personal consent to medical treatments
1973: Child Abuse Prevention and Treatment Act passed
1978: Eighteen is the statutory majority age in forty-four
jurisdictions
Children own themselves
Schoonbroodt and Tertilt (2008)
Property Rights 4
Motivation and Preliminaries
Model and Results
Motivation
Preliminaries
Motivation: Shift in “rights over children”
Then (before 1900):
Now (1950 and after):
◮
English Poor Law
◮
Public aid: children/elderly
◮
Stubborn son to be put to
death
◮
Children can be removed
from parents if abused.
◮
Parents get benefits from
child as an apprentice.
◮
Banned child labour under
age 16.
◮
Parents cannot abandon
child under age six.
◮
Prison/monetary penalty
for child neglect
◮
Poverty exception to
compulsory schooling law.
◮
Compulsory schooling
enforced.
Parents own children
Children own themselves
Both, before and after age of majority.
Schoonbroodt and Tertilt (2008)
Property Rights 5
Motivation and Preliminaries
Model and Results
Motivation
Preliminaries
U.S. Crude Birth Rate
60
CBR, 1800-1908 (Hacker 2003),
1909-1993 (Mitchell), 1994-2005
(Vital Statistics)
CBR hp filtered
50
CBR
40
30
20
10
1998
1989
1980
1971
1962
1953
1944
1935
1926
1917
1908
1899
1890
1881
1872
1863
1854
1845
1836
1827
1818
1809
1800
0
Year
Property rights shift may have contributed to fertility decline.
Schoonbroodt and Tertilt (2008)
Property Rights 6
Motivation and Preliminaries
Model and Results
Motivation
Preliminaries
Is fertility inefficiently low?
Coase’s Theorem
Property rights don’t matter for efficiency of allocation
—if bargaining is possible.
Our argument
1. When parents “own” children, costs and benefits of having
children borne by same people: parents.
→ equilibrium fertility is efficient
2. When parents don’t “own” children, costs and benefits of
having children borne by different people. Parents bear
cost, children reap benefits.
→ equilibrium fertility not efficient
3. Unborn children cannot write contract with parents when
property rights are assigned to them by law.
Schoonbroodt and Tertilt (2008)
Property Rights 7
Motivation and Preliminaries
Model and Results
Motivation
Preliminaries
Preliminaries
Efficiency
◮
◮
Pareto efficiency is not defined in models with fertility
choice.
Golosov, Jones, and Tertilt (Econometrica 2007) suggest
two generalizations of Pareto Efficiency that can handle
models with fertility:
◮
◮
◮
P-Efficiency
A-Efficiency
In this paper: use these concepts for welfare analysis.
Schoonbroodt and Tertilt (2008)
Property Rights 8
Motivation and Preliminaries
Model and Results
Motivation
Preliminaries
P-Efficiency
Assumption
For each i ∈ P, there is a well defined, real-valued utility
function ui : A → R, where A is the set of all allocations.
Definition
A feasible allocation z = {(ci , ni )}i is P-efficient if there is no
other feasible allocation ẑ such that
1. ui (ĉ, n̂) ≥ ui (c, n) for all i ∈ P
2. ui (ĉ, n̂) > ui (c, n)) for at least one i ∈ P.
Schoonbroodt and Tertilt (2008)
Property Rights 9
Motivation and Preliminaries
Model and Results
Motivation
Preliminaries
A-Efficiency
Assumption
For each i ∈ P, there is a well defined, real-valued utility
function ui : A(i) → R, where A(i) is the set of all allocations in
which i is born.
Definition
A feasible allocation z = {(ci , ni )}i is A-efficient if there is no
other feasible allocation ẑ such that
1. ui (ĉ, n̂) ≥ ui (c, n) ∀i alive in both allocations.
2. ui (ĉ, n̂) > ui (c, n)) for some i alive in both allocations.
Schoonbroodt and Tertilt (2008)
Property Rights 10
Motivation and Preliminaries
Model and Results
Model
Results
A two-period endowment model of fertility choice
max
s.t.
u(cm ) + βu(co ) + γu(n) + ζu(ck )
cm + θn + s ≤ wm
co + bn ≤ wo + Rs
ck ≤ wk + b
b≥b
b
→ measure of property rights
b = −∞
parents own children’s income
b=0
children own their income
Schoonbroodt and Tertilt (2008)
Property Rights 11
Motivation and Preliminaries
Model and Results
Model
Results
Solution to unconstrained problem (b = −∞)
With u(·) = log(·):
n∗ =
b∗ =
ck∗ =
(γ − ζ) [w o + Rw m ]
(β + γ + 1)[Rθ − w k ]
ζRθ − wk γ
(γ − ζ)
ζ[Rθ − w k ]
(γ − ζ)
Assume: γ > ζ and Rθ > wk for interior solution
Negative bequest: b ∗ < 0 if wk > γζ Rθ
Schoonbroodt and Tertilt (2008)
Property Rights 12
Motivation and Preliminaries
Model and Results
Model
Results
Solution with binding constraint (0 ≥ b > b∗ )
With u(·) = log(·):
n̄ =
γ [w o + Rw m ]
(1 + γ + β)(Rθ + b)
n̄ is decreasing in b
Schoonbroodt and Tertilt (2008)
Property Rights 13
Motivation and Preliminaries
Model and Results
Model
Results
Property rights and Fertility decline
Result 1:
As self-ownership of children increases, fertility decreases.
Question:
Is fertility inefficiently low?
Schoonbroodt and Tertilt (2008)
Property Rights 14
Motivation and Preliminaries
Model and Results
Model
Results
Solution (special case: b∗ < b = 0)
γ [wo + Rwm ]
(1 + γ + β)(Rθ)
β(wo + Rwm )
=
1+γ+β
wo + Rwm
=
R(1 + γ + β)
= wk
n̄ =
c̄o
c̄m
c̄k
We will show that n̄ is inefficiently low.
Schoonbroodt and Tertilt (2008)
Property Rights 15
Motivation and Preliminaries
Model and Results
Model
Results
A- and P-superior allocation
n̂ = n∗ + ε,
ĉm =
For T ∈
◮
ζ
γ Rθ, wk
∗
cm
ĉk = ck∗ = wk ,
− εθ,
ĉo =
co∗
ĉkk = wk − T
+ εT
and some small ε, allocation A-superior:
Parent:
ÛP|ε=0 = UP∗
h
i
ζ
∂ ÛP =
β
T
−
Rθ
u ′ (co∗ ) + ζckk u ′ (n∗ ck∗ ) > 0
∂ε
γ
ε=0
◮
Children:
Ûi = Ui∗
◮
∀i ∈ [0, n∗ ]
New child:
Ûkk = u(wk − T )
Also P-superior if one assumes: u(wk − T ) > u(unborn).
Schoonbroodt and Tertilt (2008)
Property Rights 16
Motivation and Preliminaries
Model and Results
Model
Results
Fertility may be inefficiently low
Result 2:
Children have property rights (b = 0):
We can have an extra person be born,
compensating the parents.
Hence, fertility is inefficiently low.
Question:
Room for government intervention?
Restore efficiency using which policy?
Schoonbroodt and Tertilt (2008)
Property Rights 17
Motivation and Preliminaries
Model and Results
Model
Results
Outlook
More general model
Evidence on laws and fertility levels
Evidence on fertility levels and bequests
Policy Implications
Where do laws come from?
Schoonbroodt and Tertilt (2008)
Property Rights 18
Motivation and Preliminaries
Model and Results
Model
Results
Policy implications
◮
Sovereignty of children may be desirable
◮
Social Security system that is dependent on number of
children will restore efficiency?
◮
Mandatory parental support?
Schoonbroodt and Tertilt (2008)
Property Rights 19
Motivation and Preliminaries
Model and Results
Model
Results
Are parents really constrained?
◮
Maybe only a fraction of the population is truly
constrained?
◮
Maybe constraints are only binding at certain times?
◮
Maybe the constraints go away endogenously (with human
capital for example)?
Schoonbroodt and Tertilt (2008)
Property Rights 20
Motivation and Preliminaries
Model and Results
Model
Results
Endogenizing property rights
◮
Political economy version?
◮
Other missing markets may lead to effective property rights
as opposed to legal property rights.
Schoonbroodt and Tertilt (2008)
Property Rights 21
Motivation and Preliminaries
Model and Results
Model
Results
English Poor Law in Colonial America
1601
English Poor Law Act (Section 14):
“It should be the duty of the father, grandfather, mother, grandmother,
husband, or child, of a poor, old, blind, lame or impotent person, or
other poor person, not able to work, if possessed of sufficient means,
to relieve and maintain that person.”
“When these laws passed over into the American scene, during
the seventeenth and eighteenth centuries, the focus was on the
responsibilities of children towards their elderly parents[...]”
(Callahan 1985, pg 33)
[Then]
Schoonbroodt and Tertilt (2008)
Property Rights 22
Motivation and Preliminaries
Model and Results
Model
Results
“Stubborn Child Laws”
1646
An act of the General Court of Massachusetts decreed:
“If a man have a stubborn or rebellious son, of sufficient years and
understanding, viz. sixteen years of age, which will not obey the voice
of his Father or the voice of his Mother, and that when they have
chastened him will not harken unto them: then shall his Father and
Mother being his natural parents, lay hold on him, and bring him to
the Magistrates assembled in Court and testify unto them, that
their son is stubborn and rebellious and will not obey their voice
and chastisement [...] such a son shall be put to death.”
States that followed: Connecticut 1650, Rhode Island 1668,
New Hampshire 1679 (Mason 1994, pg 11)
[Then]
Schoonbroodt and Tertilt (2008)
Property Rights 23
Motivation and Preliminaries
Model and Results
Model
Results
“Learning a Trade”
1646
In Respublica v. Kepple the Pennsylvania Supreme Court...
“[...]held that there were limits to the purposes for which a parent
could bind out a child: they could bind him out to learn a trade, but not
as a servant[...] Parents could have the benefit of the child’s services
or relief from their obligation of support, but only as an incident of
preparing him for later life.”
(Marks 1975, pg 81)
[Then]
Schoonbroodt and Tertilt (2008)
Property Rights 24
Motivation and Preliminaries
Model and Results
Model
Results
“Exceptions to Compulsory schooling”
1852 to 1929
MA first to pass compulsory school attendance law.
“Exceptions were made for children lacking mental and physical
ability, and for poverty of the parent or guardian. Local school officials
and the city treasurer were responsible for enforcement, and
monetary fines up to 20 dollars could be imposed on violators. The
Massachusetts law served as a model for the laws of most other
states.” (Landes 1972, pg 55-58)
States that followed: New Hampshire,Washington, and Michigan 1871; Nevada 1873; New York, California, and
Kansas 1874; Maine and New Jersey 1875; Vermont and Wyoming 1876; Ohio 1877; Connecticut 1872; Wisconsin
1879; Rhode Island, North Dakota, South Dakota, Montana, and Illinois 1883; Minnesota 1885; Idaho 1887; Oregon
and Colorado 1889; Utah 1890; New Mexico 1891; Pennsylvania 1895; Kentucky and Hawaii 1896; West Virginia
and Indiana 1897; Arizona 1899; Maryland and Iowa 1902; Tennessee and Missouri 1905; North Carolina,
Oklahoma, and Delaware 1907; Virginia 1908; Arkansas 1909; Louisiana 1910; South Carolina, Alabama, Texas,
and Florida 1915; Georgia 1916; Mississippi 1918; Alaska 1929
[Then]
Schoonbroodt and Tertilt (2008)
Property Rights 25
Motivation and Preliminaries
Model and Results
Model
Results
Sovereignty in medical decisions
1852 to 1929
Mississippi passed a statute that ”allows any minor who can
understand the consequences of the [medical] treatment to
give personal consent, without regard to the youth’s age.”
“Previously all forms of medical and health treatment for minors
(under the age of majority) required parental consent.
(Plotkin 1981, pg 123)
States with similar laws:
1975 California allowed minors to give consent for "certain types of services, such as birth control and treatment for
venereal disease and pregnancy." (Plotkin 1981, pg 123);
1973 Colorado "enacted legislation that grants immunity from suit to doctors who act on a good-faith belief that
parental consent is not required" (Plotkin 1981, pg 124);
1971 New York Public Health Law allows "any minor, whether or not officially emancipated, who is or has been
married or who has borne a child may consent to treatment" (Plotkin 1981, pg 126)
[Now]
Schoonbroodt and Tertilt (2008)
Property Rights 26