CHAPTER I1 SURVEY OF LITERATURE Introduction The primary objective of this study is to understand the behaviour of married couples with respect t o fertility and family size. There are various factors which influence fertility behaviour and each factor operates with different strength. A survey of existing literature on fertility will be of great use for identifying the factors and evaluating the methods to be used. The study of fertility has been a common a r e a of research among social scientists in various disciplines like anthropology, demography, economics, sociology and psychology. The work done in this area is vast and varied that it is beyond t h e scope of this research work to present a comprehensive survey of all important works. However, a number of excellent survey works have been published in each field. The emphasis here is on major theories and studies of fertility than can be called economic approach. By economics of f e r t i l i t y we mean that couples make a choice in the area of fertility; they weigh the costs and benefits of having children and compare them with costs and benefits of
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CHAPTER I1
SURVEY OF LITERATURE
I n t r o d u c t i o n
The primary o b j e c t i v e of t h i s s tudy i s t o
unders tand t h e behaviour of mar r ied couples w i t h r e s p e c t t o
f e r t i l i t y and fami ly s i z e . There a r e v a r i o u s f a c t o r s which
i n f l u e n c e f e r t i l i t y behaviour and each f a c t o r o p e r a t e s w i t h
d i f f e r e n t s t r e n g t h . A survey of e x i s t i n g l i t e r a t u r e on
f e r t i l i t y w i l l be of g r e a t use f o r i d e n t i f y i n g t h e f a c t o r s
and e v a l u a t i n g t h e methods t o be used. The s tudy of
f e r t i l i t y h a s been a common a r e a of r e s e a r c h among s o c i a l
s c i e n t i s t s i n v a r i o u s d i s c i p l i n e s l i k e an thropology ,
demography, economics, soc io logy and psychology. The work
done i n t h i s a r e a i s v a s t and v a r i e d t h a t it i s beyond t h e
scope o f t h i s r e s e a r c h work t o p r e s e n t a comprehensive
survey of a l l i m p o r t a n t works. However, a number of
e x c e l l e n t survey works have been publ i shed i n each f i e l d .
The emphasis h e r e i s on major t h e o r i e s and s t u d i e s of
f e r t i l i t y t h a n can be c a l l e d economic approach. By economics
of f e r t i l i t y we mean t h a t couples make a c h o i c e i n t h e a r e a
of f e r t i l i t y ; t h e y weigh t h e c o s t s and b e n e f i t s of having
c h i l d r e n and compare them w i t h c o s t s and b e n e f i t s of
alternative consumption/investment goods. Further, they also
decide the size of the family, i.e. number of children they
would like to have. In other words, couples are rational;
they have preference and act in such a way as to reach their
preference with minimum effort. We further narrow our
discussion to studies and theories closely related to the
approach followed in this study, namely economic approach to
fertility behaviour or household production function
approach.
Economic Approach to Fertility Behaviour
Although interesting insights on the economics of
population can be derived since Malthus (17981, systematic
development of the economics of fertility begins only in the
late 19501s, when Leibenstein (1957) and Becker (1960)
attempted to apply consumer demand theory to the study of
fertility behaviour. The primary justification for the
application of a micro economic framework to fertility
analysis is that fertility decisions are made in a manner
that is analogous to more usual economic choices (Willis,
1973). Many studies in both developed and developing
countries indicate that economic consequences exert a
considerable influence on couple's reproductive decision
( S c h u l t z , 1 9 7 4 ) . F u r t h e r , p a r e n t s a l l over t h e world o f t e n
r e p o r t t h a t c h i l d r e n p lay p o s i t i v e economic r o l e s , i n terms
of p rov id ing s a t i s f a c t i o n s o r work c o n t r i b u t i o n s o r bo th
(Bula tao , 1 9 7 9 ) . I n f a c t , i n r e c e n t y e y s t h e s tudy of t h e
economic d e t e r m i n a n t s of household demographic behaviour has
c o n t r i b u t e d t o a r e a p p r a i s a l of t h e consequences of
popula t ion growth on economic development ( S c h u l t z , 1 9 8 7 ) .
Even w i t h i n t h e domain of micro economic
t h e o r i e d s t u d i e s a r e d i v e r s i f i e d i n t h e i r purpose and scope.
~ e c o g n i z i n g t h e fami ly a s a d e c i s i o n making u n i t t a k e s on a
v a r i e t y of e x t e n s i v e forms, many models have been developed
t o r e p r e s e n t t h i s f l e x i b l e i n s t i t u t i o n . Long term n a t u r e of
l i f e - c y c l e commitments, and t h e n a t u r e of endogenous
household d e c i s i o n s n e c e s s i t a t e s such d i v e r s i f i c a t i o n
approach t o t h e s tudy o f f e r t i l i t y d e c i s i o n s . Hence, t h e
scope of household d e c i s i o n s making, model l ing has been
extended t o i n c l u d e l i f e - c y c l e , dynamic and s t r a t e g i c demand
models and j o i n t d e t e r m i n a t i o n o f household d e c i s i o n s such
a s a g e a t m a r r i a g e , f e r t i l i t y , human c a p i t a l i n v e s t m e n t s ,
household l a b o u r f o r c e p a r t i c i p a t i o n and wages and
migra t ion . I n view of enormous l i t e r a t u r e on t h e s e a s p e c t s
r e l a t e d w i t h f e r t i l i t y , our scope i s conf ined t o a review of
t h e t h e o r y and e v i d e n c e of t h e demand f o r c h i l d r e n o n l y
under the following specific economic motives for having
children, viz., consumption utility, income utility old age
security utility, son preference, and consequences of family
planning practices on demand for qildren and impact of
women's labour force participation on fertility.
Much of the recent work interpreting fertility as
an economic choice has adopted the 'new home economicst
approach that treats the number of children born as wholly
demand determined. The dominance of demand factors become
progressively greater as the birth control technology
improves and becomes more widely available (Rosenweig and
Schultz, 1985a, 1985b).
Consumption Utility and the Demand for Children
Becker (1960) maintains that parents everywhere
get pleasure from having own children. Children are regarded
as satisfactions in themselves; hence children are consumer
durables. Beckerts argument is relatively simple; fertility
decisions are economic in that they involve a research for
an optimum number of children in the face of resource
constraint. Parents have three arguments in the utility
function; the number of children, the quality of those
children and the quantity of other goods which they consume.
They face a lifetime income constraint, and their problem is
to maximize utility given the income constraint. The whole
theory of fertility as consumption rests on the postulates
that parents respond to economic considerations in children,
and that parents equate marginal sacrifices and
satisfactions in having children (Becker 1960; Schultz,
1974). Becker assumed children to be 'normal goods' and
therefore, the effect of income on fertility is hypothesized
to be positive.
With the introduction of the notion of opportunity
cost of time by mincer (1962, 19631, particularly that of
female time as a component of the price faced by parents in
child bearing, both theoretical and empirical studies of
fertility grew in number. Mincer shifted the emphasis from
money costs to opportunity costs and from current income to
permanent income, that influences parental decisions,
Mincer's empirical test with U.S. data confirmed his
theoretical prediction of negative price effect (measured by
wife's wage) and positive income effect (measured by
husband' s wage ) .
The extension of the demand theory to encompass
the allocation of time by Becker (1965) Lancaster (1966) and
Muth (1966) provided rigorous way to analyze the household
non-market activities, the most notable and measurable of
which is probably the production of children. The salient
features of this modern 'new home economics' may be briefly
described as follows: the family is assumed to possess a
family utility function in which the arguments are basic
commodities', and not the market goods and services as in
the traditional theory. These basic commodities are home
produced, using household member's time and market purchased
goods and services and the production processes are
described by 'household technology' . These home produced
commodities are not tradeable and have shadow prices. In
addition to the usual money income constraint, there is also
the * time constraint' for the household. These two I
constraints together constitute the full
income'constraints, on the assumption that time can be
converted into goods by selling time in the market for
wages. It is hypothesized that the household maximize family
utility subject to the constraints of production function
and full income.
Following t h o s e developments, Willis (1973)
f o r m a l l y d e r i v e d t h e demand f o r t h e number of c h i l d r e n a long
w i t h t h e demand f o r c h i l d q u a l i t y . Michael (1973) analyzed
t h e e f f e c t of e d u c a t i o n on t h e demand f o r demand f o r
c h i l d r e n ; Detray (19731, Becker and Lewis (1973) and Becker
and Tomes (1976) ana lyzed t h e i n t e r a c t i o n between q u a n t i t y
and q u a l i t y of c h i l d r e n and t h e i r e f f e c t on t h e demand f o r
c h i l d r e n . Ben P o r a t h ( 1 9 7 3 ) , Gardner ( 1 9 7 3 ) , Hashimoto
(1974) and S c h u l t z ( 1 9 7 4 ) ' a r e t h e o t h e r s who have ana lyzed
t h e r e p r o d u c t i v e behaviour wi th t h i s frame work. The
s u c c e s s f u l a p p l i c a t i o n o f t h e new home economic model t o t h e
f e r t i l i t y behaviour i n developed c o u n t r i e s has l e d t o i t s
a p p l i c a t i o n t o t h e deve lop ing c o u n t r i e s . However, l e s s
deve loped c o u n t r i e s e x h i b i t only mixed r e s u l t s .
Subsequent e l a b o r a t i o n s of t h e new home economic
approach a r e d i v e r s i f i e d . One such e x t e n s i o n i s t h e
i n c l u s i o n of b i o l o g i c a l a s p e c t s of r e p r o d u c t i o n i n t o t h e
models o f f e r t i l i t y . Heckman and Willis (1976) a t t empted t o
f o r m u l a t e a r a t i o n a l model of r e p r o d u c t i v e d e c i s i o n making
w i t h i n a s t o c h a s t i c dynamic program ming framework.
Rosenzweig and S c h u l t z (1985a 1985b) i n c l u d e exogenous
g e n e t i c and envi ronmenta l f a c t o r s t h a t a f f e c t t h e f a m i l y ' s
p r o d u c t i o n o f C h i l d h e a l t h . Resenzweig and S c h u l t z (1983a)
relaxes the assumption of no joint production with little
added complexity and allows for random allocation of goods
without reference to household decisions (for e.g.,the
occurrence of twins in Resenzweiq and Wolpin, 1980).
Resenzweig and Schultz (1985a, 1985bj develop instrumental:
variable estimates of a reproduction function which can
explain subsequent modifications in the couple's
contraceptive behaviour and wife's market labour supply.
Dynamic fertility models have been and continuous to be an
active area of research (Wolpin, 1984; Heckman, Hotz and
Walker, 1985; Newman, 1987). Bernteim, Shleifer and Summers
(1985) and Bernheim and Stark (1986) develop a strategic
demand model for children (encompassing various motives and
preferences).
The received demand theory suggests that the
income and prices are the most important determinants of the
demand for consumption goods. Since the new home economic
model relies heavily on the received demand theory, its
emphasize on the income effect and price effect on the
demand for children is worth noting. This following two
sub-sections briefly review the theory and empirical
evidence for the income effect and the price effect on the
demand for children.
F e r t i l i t y - Income R e l a t i o n s h i p
H i s t o r i c a l ev idence shows t h a t income growth t e n d
t o reduce f e r t i l i t y i n t h e long r u n , a u e a s t a t t h e macro
l e v e l on t h e o t h e r hand, i f c h i l d r e n resemble normal goods,
a s assumed by t h e new home economists , economic theory would
p o s t u l a t e a p o s i t i v e r e l a t i o n s h i p between t h e family income
and t h e demand f o r c h i l d r e n . T y p i c a l l y , economic t h e o r y
s u g g e s t s t h a t income may have v a r i e t y of e f f e c t s on
f e r t i l i t y depending on t h e sources of income change and
environment faced by t h e household. The pure income e f f e c t
on t h e demand f o r c h i l d r e n i s very l i k e l y t o be p o s i t i v e ,
w h i l e some major i n d i r e c t e f f e c t s a r e n e g a t i v e ; t h e t o t a l
income e f f e c t be e i t h e r p o s i t i v e o r n e g a t i v e . The p u r e
income e f f e c t i s d e f i n e d a s t h e change i n t h e demand f o r
c h i l d r e n t h a t i s d i r e c t l y a t t r i b u t a b l e t o t h e change i n
income, whi le economis t s s u s p e c t t h a t t h e income e l a s t i c i t y
o f demand f o r c h i l d r e n i s p o s i t i v e (Becker and Lewis, 19731,
t h e r e i s no th ing i n economic t h e o r y t h a t p r e c l u d e s w e a l t h i e r
p a r e n t s demanding fewer c h i l d r e n (Muel le r and s h o r t , 1 9 8 3 ) .
The i n d i r e c t e f f e c t s a r e t h o s e which o p e r a t e
th rough v a r i a b l e s t h a t a r e c a u s e s and consequences of income
change, such a s changes i n t h e v a l u e of t i m e , c o s t s of
c h i l d r e n , t a s t e s f o r consumer goods, perceived b e n e f i t s from
c h i l d r e n and female and c h i l d l a b o u r f o r c e p a r t i c i p a t i o n .
There a r e wide spectrum of e m p i r i c a l r e s u l t s depending on
t h e u n i t of a n a l y s i s , v a r i a b l e s measured and used , d a t a
s o u r c e s , l o c a l i t i e s and s t a t i s t i c a l t echniques used. S t u d i e s
i n v a r i o u s c o u n t r i e s , a t t h e aggrega te l e v e l , f a i l t o
s u p p o r t t h a t income i n c r e a s e s c h i l d b e a r i n g (Thorn t o n , 1978;
B i r d s a l l and Jamison, 1983; F i n d l e y and Orr, 1978) . However,
Keeley (1980) found f o r urban Kenya t h a t c h i l d r e n a r e normal
good, i . e . , a p o s i t i v e r e l a t i o n s h i p between income and
f e r t i l i t y .
A t t h e household l e v e l t h e e f f e c t s a r e n o t
d e f i n i t i v e ; much of t h e e f f e c t s depend on t h e s o u r c e s of
income changes. The economics of educa t ion t e a c h e s u s t h a t
(male and female) e d u c a t i o n i s impor tan t among t h e
d e t e r m i n a n t s of income changes, i n t h a t i t s i n f l u e n c e on
income o p e r a t e s e n t i r e l y th rough t h e p r o d u c t i v i t y of t i m e ;
w h i l e it g e n e r a t e s a p o s i t i v e income e f f e c t on t h e demand
f o r c h i l d r e n , it a l s o r a i s e s t h e o p p o r t u n i t y c o s t of t ime .
If c h i l d r e n a r e i n t e n s i v e i n female t ime , t h e p r i c e e f f e c t
w i l l be n e g a t i v e and hence, t h e demand f o r c h i l d r e n
d e c r e a s e s w i t h educa t ion (Willis, 1973; Michael, 1973).
F u r t h e r , h i g h e r educa t ion induces e f f i c i e n t c o n t r a c e p t i v e
use, and thereby reduces the demand for children (Becker,
1960).
Another source of income change is husband's
earnings. There is substantial evidence, especially in
developed countries, that the response of fertility to
changes in husband's earnings (or education, where it is
proxy for male earnings) is positive; while the changes in
wife's earning is negative or atleast less positive that
husband's earnings (Mueller and Cohn, 1977). Asset structure
of the household also induce income changes. A pure increase
in the non-labour income is positively associated with
fertility (Willis, 1973; Detray, 1973; Benporath, 1973). In
developing countries, where land is used as a measure of
asset, various measures of landed property shows a
consistent (most cases are significant) positive
relationship; implying positive income effect in rural areas
(Kleiman 1973; Rogenzweig and Evenson, 1977; Cain, 1983;
Nugent, Kan and Walter, 1983; Schutjer and Stokes, 1982).
However Repetto (1978) obtains a mixture of positive and
negative coefficients.
The inverse relationship between income and
.fertility is generally observed for urban areas as shown by
an analysis of data from thirty eight less developed
countries (Findley and Orr, 1978). This is consistent with
the one found by Ben Porth (1973) for Israel, Schultz (1981)
for Columbia, Khan and Sirageldin (1.79) for Pakistan and
Encarnacian (1974) for Philippines Urban data. Similarly,
the positive income-fertility relationship in rural areas is
supported by Mueller and Cohn (1977) for Taiwan, Anker
(1977) and Cherinichovsky (1982) for India, Schultz (1981)
for Columbia and Khan and Sirageldin (1979) for Pakistan.
Another interesting finding is the existence of
income threshold and non-linear effects in the
income-fertility relationship. From Philippines data
Encarnacion (1974) finds a significant positive relation to
fertility to income for groups below a level of appropriate
median income. The non linear effect is also supported by
Canlas (1978) with new data set for Philippines and Repetto
(1978) for Puerto Rica. Studies also report insignificant or
no relationship between income and fertility (Nerlove and
Schultz, 1970; Ben Porath, 1973; Mueller and Cohn, 1977).
Income increases also enhances the desire for
higher quality children and taste for consumer durable
(Becker and Lewis, 1973; Easterlin, 1968, 19691. The rising
consumption and educational aspirations coupled with the
d e c l i n e i n perce ived b e n e f i t s from c h i l d r e n (Mueller 1972;
Bula tao , 1979; Caldwell , 1978, 1982) , may cause a s e c u l a r
d e c l i n e i n t h e demand f o r c h i l d r e n ( E a s t e r l i n , 1973) .
F e r t i l i t y - P r i c e o f C h i l d r e n R e l a t i o n s h i p
The r e l a t i v e c o s t s of v a r i o u s goods and t ime
i n p u t s a r e presumed t o a f f e c t t h e c o s t of c h i l d r e n . The new
home economic model p r e d i c t s a n e g a t i v e r e l a t i o n s h i p between
t h e c o s t of t ime and goods needed t o r a i s e c h i l d r e n and
f e r t i l i t y ( W i l l i s , 1 9 7 3 ) . The proponents of t h e economic
t h e o r y of f e r t i l i t y view c h i l d r e n a s ' t ime- in tens ive '
e s p e c i a l l y i n female t ime. This i s p a r t i c u l a r l y t r u e i f
c h i l d r e n a r e t o be w e l l ca red f o r and wel l educated.
T h e r e f o r e , t h e c o s t s of t i m e i n p u t s e x e r t an i n f l u e n c e on
t h e f a m i l y s i z e of couples . Chi ld b e a r i n g t i m e i s assumed t o
be prov ided l a r g e l y by mothers , s o t h a t t h e c o s t of t h e
m o t h e r ' s t i m e t a k e s on c e n t r a l importance. Gronau (1973) has
proposed a t i m e a l l o c a t i o n procedure between.marketed work,
non-market work and l e i s u r e . The new home economics model
a l l o w s f o r a t rade-of f between mother ' s market t i m e and
c h i l d b e a r i n g time. The v a l u e of m o t h e r ' s t i m e i s determined
by t h e amount she could e a r n i f s h e were t o engage i n income
e a r n i n g a c t i v i t i e s .
The economic theory of fertility assumes that time
use responds fairly to changes in economic and demographic
circumstances. Quite often, the amount of time that women
devote to household work decreases with education and market
work time increases with education (Gronau, 1973; Malathy,
1984). Education affects the demand for children primarily
by its effect on i) the opportunity cost of the wther's
time, ii) the father's and mother's income and iii) the
modernization and aspiration of the family. Indirectly,
female education affects the demand for children via
knowledge, attitude and practice of contraception (Jain,
1981; Jain and Nag, 1985; Nag, 1980; Nag and Kak, 1984;
Rosenzweig and Sciver, 1982). Michael (1973) identifies four
channels through which education influences fertility;