Publication Title: ERSA Working Paper 442

Abstract: This study develops an economic fertility model, which explicitly incorporates both the costs of childrearing and contraception behavior. In this setting, a couple’s capacity to procreate depends on their fecundity, as well as their contraception and sexual behaviors; and the ideal number of children is chosen by maximizing the utility of children, subject to a budget constraint reflecting the couple’s income, and their specific explicit and implicit costs of rearing children. Using a nonparametric causal mediation framework (Pearl, 2009; Heckman and Pinto, 2013), our analysis explicitly explores the role of family planning services and the cost of children in mediating the causal effect of income on fertility, subject to unmeasurable fecundity and unobserved sexual risk taking behavior. In particular, we discuss the definition, identification and estimation of a variety of causal effects.