Parental Transfers and Fertility: Does the Recipient's Gender Matter?

Abstract

This paper examines the role of parental transfers on family size. We introduce a simple theoretical model of fertility decision where preferences towards children may differ between female and male spouses. Parental transfers increase both the household income and the bargaining power of the recipient spouse. Therefore, transfers from wife's and husband's parents may have dissimilar effects on the number of children. We empirically test and confirm this hypothesis using a unique household-level data for Japan. In particular, received transfers from the wife's parents reduce the demand for children. In contrast, both received and expected transfers from the husband's parents increase the demand for children. These results hold important policy implications.