DP14329 Family Planning and Development: Aggregate Effects of Contraceptive Use
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.