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Tae
In economic theory, households make decisions to maximize their welfare. In the case of a couple households, they jointly make a decisions. There are papers explaning the couple household’s decision-making mechanism through variety aspects. For the two agent households, we can apply the unitary utility function so that each household member, husband, and wife, make a decision together. There are many articles that use the unitary household model to explain fertility choice. For example, Becker and Barro (1988) shows the model of fertility choice with unitary households. On the other hand, there are some papers that focus on the intra-household bargaining mechanism. Rasul (2008) introduced a fertility choice model with intra-household bargaining. Udry (1996) argues about the cooperative intra-household bargaining and its problem of Pareto efficiency.
Majority of the papers that use intra-household bargaining topics about fertility choice. They empirically and theoretically showed the fertility choice of couple households. Fertility choice is, also, a major issue in the development of the country. In developed countries such as Japan, Germany, Spain, and Austria, the total fertility rate is below 1.5 in recent decades; while the developing countries have high fertility rates. Rasul (2008), Becker and Barro (1988), and Doepke and Kindermann (2019) are the papers related with the fertility choice of each households. These three papers discussed the fertility choice model, but their detailed focus points are different. Becker and Barro (1988) built a model with the unitary household with child-rearing cost and long-term world interest rates. Rasul (2008) has a 2 period model with a bargaining mechanism. Doepke and Kindermann (2019) is the recent paper, and they make a model based on the model from Rasul (2008). As a stylized fact, they included the time of fertility choice, so couple households bargain for the timing of having a baby.
For this project, I plan to replicate the model, modify and add data and further analyze the paper Doepke and Kindermann (2019). The paper uses Generations and Gender Programme(GGP) data. It has a variable that indicates the preference of childbearing for each partner. They found that the agreement between a woman and man is an important factor to understand the fertility choice. Moreover, according to their model, the distribution of the child care burden affects the country’s fertility rate. As a first step, I will check the GGP data and their model. I plan to replicate the model from the paper to understand the intra-household bargaining mechanism and the solution of the model. The GGP data doesn’t have South Korea so that I will check if there are any data from South Korea that includes the key variable that indicates the preference of childbearing for each partner. South Korea is a country that has a very low fertility rate just like other developed countries, and it is one of the important policy issues. Therefore, if it is possible, I may apply the model to South Korea and calibrate with the new data. Furthermore, South Korea has many new policies for child care. I may be able to examine the policy impact with the new data.
The below link provides some more detail of the key paper Doepke and Kindermann (2019). Now, it only has three sections Intro, Data, and Model. {google_docs}https://drive.google.com/file/d/1-9TL0PwDVwiAhoMwhTdj0tpg8X6_K7ja/view?usp=sharing{/google_docs}
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