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  • Title: Empirical tests of the Chicago model and the Easterlin hypothesis: a case study of Japan.
    Author: Ohbuchi H.
    Journal: Jinkogaku Kenkyu; 1982 May; (5):8-16. PubMed ID: 12338784.
    Abstract:
    The objective of this discussion is to test the applicability of economic theory of fertility with special reference to postwar Japan and to find a clue for forecasting the future trend of fertility. The theories examined are the "Chicago model" and the "Easterlin hypothesis." The major conclusion common among the leading economic theories of fertility, which have their origin with Gary S. Becker (1960, 1965) and Richard A. Easterlin (1966), is the positive income effect, i.e., that the relationship between income and fertility is positive despite the evidence that higher income families have fewer children and that fertility has declined with economic development. To bridge the gap between theory and fact is the primary purpose of the economic theory of fertility, and each offers a different interpretation for it. The point of the Chicago model, particularly of the household decision making model of the "new home economics," is the mechanism that a positive effect of husband's income growth on fertility is offset by a negative price effect caused by the opportunity cost of wife's time. While the opportunity cost of wife's time is independent of the female wage rate for an unemployed wife, it is directly associated with the wage rate for a gainfully employed wife. Thus, the fertility response to female wages occurs only among families with an employed wife. The primary concern of empirical efforts to test the Chicago model has been with the determination of income and price elasticities. An attempt is made to test the relevance of the Chicago model and the Easterlin hypothesis in explaning the fertility movement in postwar Japan. In case of the Chicago model, the statistical results appeared fairly successful but did not match with the theory. The effect on fertility of a rise in women's real wage (and, therefore in the opportunity cost of mother's time) and of a rise in labor force participation rate of married women of childbearing age in recent years could not be verified. The application of the Easterlin hypothesis to Japan provided more satisfactory results. 4 variants of measure of relative economic status were tried to apply. 1 of them was the relative cohort size, the movement of which failed to coincide with that of fertility. The other 3 variants were considerably well fitted with fertility changes. The Chicago model was rejected, and the Easterlin hypothesis received some support from the available evidence. According to the findings, recent decline in fertility can be explained by a worsening of relative income status of young couples.
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