DP14329 Family Planning and Development: Aggregate Effects of Contraceptive Use

Author(s): Tiago Cavalcanti, Georgi Kocharkov, Cezar Santos
Publication Date: January 2020
Keyword(s): Abortion, Contraception, education, Income per capita
JEL(s): E24, I15, J13, O11
Programme Areas: Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14329

What is the role of family planning interventions on fertility, savings, human capital investment, and development? To examine this, endogenous unwanted fertility is embedded in an otherwise standard quantity-quality overlapping generations model of fertility and growth. The model features costly fertility control and families can (partially) insure against a fertility risk by using costly modern contraceptives. In the event of unexpected pregnancies, households can also opt to abort some pregnancies, at a cost. Given the number of children born, parents decide how much education to provide and how much to save out of their income. We fit the model to Kenyan data, implement several family planning policies and decompose their aggregate effects. Our results suggest that with a small government budget (say, up to 0.5 percent of GDP), family planning interventions might be more cost-effective in improving longrun living standards than policies that subsidise basic education.