Uncovering the myth of fertility : job-skills mismatch and fertility decisions

• Main Authors: Tsang, Wei Yi, Teo, Cheryl Hui Xin, Lim, Damien Wai Kit
• Other Authors: Tang Yang
• Format: Final Year Project
• Language: English
• Published: 2015
• Subjects: DRNTU::Social sciences::Economic theory
• Online Access: http://hdl.handle.net/10356/62508
• Institution: Nanyang Technological University

Central to the analysis in this paper is the following question asked – “How does job-skills mismatch affect individuals’ fertility decisions?” This paper presents an investigation of that relationship through the empirical analysis of United States (U.S.) population census data, and the testing of a theoretical fertility model. The paper is arranged as such; the first part examines the determinants of fertility and the job-skills mismatch variable. Using the Poisson regression model, we measure their impacts on a woman’s fertility decision. The second part develops a theoretical fertility model which considers the interaction between job-skills mismatch and fertility choice. One of the most important findings of this paper is the effect of job-skills mismatch on fertility where it was observed that fertility rate declines as the degree of job-skills mismatch in the economy increases. Interestingly, the results from the numerical simulation suggest that whether job-skills mismatch increase or decrease total fertility rate in the economy largely depends on the elasticity of substitution between consumption and number of children. Connecting our empirical findings to the theoretical predictions; the negative relationship found between job-skills mismatch and number of children in the U.S. labor market therefore reflects the complementary nature of consumption and children in this country. Results of our empirical analyses have also confirmed that both income and education exhibit negative relationships with fertility rate, in line with existing literature.