Relative Cohort Size and Fertility in Latin America and the Caribbean: A Panel Data Approach

Abstract

Latin America has experienced a considerable decline in fertility over the past decades. The total fertility rate at region level was 4.57 in 1975 and fell to 2.29 in 2012. In this study, we examine effect of cohort size on fertility rate to test the applicability of the Easterlin hypotheses. According to the Easterlin hypotheses the income of young adults relative to the income of their parents is an important determinant of fertility. A major factor influencing relative income is relative cohort size. Persons born in large cohorts face greater difficulty in finding employment than persons born in small cohorts due to increased competition and consequently earn less, and, as a result have fewer children. We introduce relative cohort size into panel data models with the total fertility rate being estimated as a function of cohort size, the labor force participation rate of women, the infant mortality rate, the lagged total fertility rate, and the percent of the population that is urban. The results suggest that the Easterlin hypothesis holds in this region but the effect is weak. On the other hand, advanced medical technology hence decrease in infant mortality rate strongly affect fertility.