Monday, Feb 1 at noon, 6050 ISR-Thompson
It is widely observed that parental schooling has a negative effect on fertility and a positive effect on children's health and schooling. This paper explores the mechanisms through which schooling affects fertility and investments in children, and examines empirical evidence from Brazil. Modeling the effects of schooling on choices about the quality and quantity of children, the authors demonstrate that a plausible outcome of increased parental schooling is that parents will increase investments in child quality while decreasing the quantity of children. The authors show that increases in wives' labor supply need not accompany the decrease in fertility, since home productivity may rise as fast as labor market productivity, especially at low levels of schooling. Empirical evidence from Brazilian survey data indicates surprisingly weak effects of schooling on female labor supply at low schooling levels, inspite of large declines in fertility and large increases in market wages. There are much stronger effects of parental schooling on children's survival and schooling attainment. The results suggest that the most important effects of schooling on fertility, especially at low schooling levels, work through increased investments in child quality, with a relatively small role played by increases in wages and labor market opportunities.