Fertility, the Demographic Dividend, and Economic Growth

David E. Bloom, Harvard University
David Canning, Harvard University
Jocelyn E. Finlay, Harvard University

We exploit differential timing of abortion legalization across countries between 1960 and 2005 to estimate the effect of changes in fertility on income, finding that reducing fertility by one child per women increases income per capita by about 20%. We estimate that most of the income gain is due to an increase in the number of workers per capita, because of a lower youth dependency ratio, and higher female labor force participation. We also find that reductions in fertility lead to increased investment in education and slower population growth, but little evidence of higher physical capital intensity or worker productivity.