Fertility and Happiness in the 21st Century: Institutions, Preferences and Their Interactions

Hans-Peter Kohler, University of Pennsylvania

In this paper, we develop a macro-micro theory of fertility in contemporary advanced societies and we present a first empirical test based on comparative data. In line with the “cultural” approach and with the economic theories of fertility, we argue that, nowadays, individuals have children only as long as this is compatible with their self-fulfillment (happiness). However, what counts in decisions is the expected increase, and this is shaped by the institutional environment individuals live in. We argue that this macro-micro theory of fertility accounts for some general differences among the developed world, answering to the call of Caldwell and Schindlmayr (2003) for a common framework in the explanation of below-replacement fertility. We develop empirical tests of this hypothesis based on comparative European data from Generations and Gender Surveys.