Differences in Fertility Behavior and Uncertainty: An Economic Theory of the Minority Status Hypothesis

We revisit the question of why fertility behaviors and educational decisions appear to vary systematically across ethnic groups. We assess the possibility that fertility differentials across groups remain even though their socio-economic characteristics are similar. More specifically, we consider that parents' fertility decisions are affected by the uncertainty concerning the future economic status of their off-spring. We assume that this uncertainty varies across groups and is linked to the size of the group one belongs to. The transition path gives support to the minority status hypothesis according to which minority members usually have a higher fertility facing low potential for social mobility but may in some instances strategically decrease their fertility.