Where Does It Pay for Households to Restrict Their Fertility? Testing the Quality-Quantity Trade off

Feng Zhao, Johns Hopkins University

The economic theory of fertility transition states that the quantity of children demanded is lower where the "price of child quality" is lower. We operationalize the "price of child quality" as the strength of the relationship between household economic resources and child survival to test whether fertility is lower in regions where economic status is a stronger predictor of child survival. We use DHS data to undertake a two-step procedure where we first regress child survival measures against a household asset index and its interaction with regional dummy variables, to derive the regional price of child quality. In the second stage we regress each woman's age-adjusted fertility against the measures of regional price of child quality. We note a downward trend relationship between the regional total fertility rate and the regional price of child quality. Our results support that fertility declines can be attributed to investments in child survival.