Pranab Bardhan and Christopher Udry

in Development Microeconomics

Published in print May 1999 | ISBN: 9780198773719
Published online November 2003 | e-ISBN: 9780191595929 | DOI:

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The conventional household model of family planning focuses on the trade‐offs that households face between the number of children, investment in the children, and consumption. While the model provides insights into the fertility behaviour of families, it is incomplete because it ignores the fact that preferences of men and women regarding the number and treatment of children may differ, and because it does not consider the social context. If preferences are socially influenced, then an externality involving strategic complementarities comes into play, and this may lead to multiple fertility equilibria. Another possibility of multiple equilibria, of special relevance to economic development, arises in models where fertility decisions, the demographic structure of the society, and relative prices are linked through child labour. Poor countries may thus remain in sub‐optimal equilibria, owing to coordination failure.

Keywords: child labour; coordination failure; externalities; family planning; fertility; gender; household model; multiple equilibria; social context; strategic complementarities

Chapter.  5838 words.  Illustrated.

Subjects: Economic Development and Growth

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