Fertility choice in a life cycle model with idiosyncratic uninsurable earnings risk

Motivated by large shifts in uninsurable earnings risk over time, this paper studies the link between delaying and reducing fertility on the one hand, and earnings and fertility risks on the other. When children are modeled as consumption commitments, increases in earnings risk are associated with a reduction in family sizes and patterns of delayed childbearing. Since household ability to bear children declines with age, the postponement of birth associated with the increased earnings risk drives down the number of birth per family further. An access to in vitro fertilization (IVF) is shown to have only a limited offsetting effect. Published by Elsevier B.V.