The Economics of Fertility Timing : An Euler Equation Approach

We develop a dynamic model of fertility, female labor supply and consumption to explain birth timing, particularly why more educated women delay fertility longer. We express the birth timing decision in an Euler equation framework by treating the probability of fertility each period as a continuous choice variable with actual fertility being a random outcome given this probability. Within this framework, it is easy to see the effects of economic forces on fertility timing decisions. Using US data we show that more highly educated women delay fertility to later ages because they can accrue greater benefits from work experience