Fertility and the economic value of children: evidence from Nepal

Abstract

Economic theories of fertility transition were the dominant paradigm during the second half of the twentieth century, but in more recent years their relevance has been questioned and sociological or cultural explanations have become more popular in the demographic literature. In many cases theoretical perspectives have been abandoned all together in favour of an empirical approach leaving economists and demographers isolated from each other.

Using data collected in Nepal as part of the World Bank?s Living Standards Measurement Study, which includes large amounts of economic information at the household and individual level, the feasibility of the economic approach to fertility transition is tested in the context of rural Nepal. In order to do this it was necessary to check the quality of the Nepali fertility data. This was done and it was concluded that higher parity births tend to be underreported, while childlessness tends to be over-reported. It was also found that the quality of urban fertility data is suspect – rural fertility is focussed on throughout since it relates to economic variables in a substantively different way to urban fertility.

The relationships between fertility and the main components of income in rural Nepal – agriculture and remittances – are studied. It is hypothesised that fertility and landholding are related through the land-security hypothesis and the land-labour hypothesis. The land-security hypothesis holds that owned landholding and children are substitutes because they are both forms of security, while the land-labour hypothesis holds that cultivated landholding and fertility are complements since children can assist in tilling the land. Remittances are purported to affect fertility through increasing son preference. This is because remittances provide security and sons send remittances.

Support is found for all the hypothesised relationships. This implies that the people of rural Nepal value children for the economic benefits they can bring. The economic value of sons vastly outweighs that of daughters and the findings of this thesis indicate that increasing remittances and high levels of functionally landless households mean that son preference is unlikely to disappear soon.

Overall, this research highlights that economic theories of fertility transition have been unjustly neglected and are important for our understanding of fertility determinants – they are therefore extremely relevant for both demographers and policy makers

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Identifiers

ORCID for Andrew Hinde: orcid.org/0000-0002-8909-9152

ORCID for Yves G. Berger: orcid.org/0000-0002-9128-5384

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