Question

What might a better model to predict fertility look like, if you could get data on any additional variables at the country level? Be sure to explain the THEORY behind including these new variables in your analysis.

Subject Econometrics

Answer 1

Fertility rate measures the average number of children per woman. To better predict the fertility rate of a country we can get the following data:

• GDP per capita: Income per capita is expected to negatively impact on fertility rate. If babies are considered as consumption goods then increasing incomes will tend to reduce the fertility rate as rising income means children are needed less as producer goods and also less as investment goods because they allow greater access to capital markets.
• Female literacy rate: A fall in the female illiteracy rate is expected to reduce the fertility rate. This is based on the notion that higher female education allows better understanding of the logic of fertility controls. Further, increasing levels of education have the potential to delay the age of marriage and it also ensures effectiveness of the family planning policies.
• Female labor force participation: likely to have a negative effect on the fertility rate. This is because employment opportunities delay the age of reproduction.
• Infant mortality rate: It is likely to positively impact on fertility rate. This is because of the fact that if large numbers of children die, parents must have large numbers of children to ensure survival.