The Income-Fertility Relationship: Effect of the Net Price of a Child

This article examines the relationship between income and completed family size in empirical fertility models. The relationship, which is hypothesized to be positive, often is negative in empirical studies. This perverse result is thought to occur because of the many correlations between income and other factors that affect fertility. In this research, these other factors—such as the net price of a child, the opportunity cost of the wife’s time, and supply factors—are statistically controlled, and the income effect is positive and significant. When the net price of a child is not controlled, however, the income effect becomes negative and significant.