Agricultural productivity and fertility: Evidence from the oil palm boom in Indonesia

We analyze the link between agricultural productivity growth and fertility, using the oil palm boom in Indonesia as empirical setting. During the time period 1996 to 2016, we find consistently negative effects of the oil palm expansion on fertility. We explain this finding with rising farm profits, that led to consumption growth, the expansion of the non-agricultural sector, increasing returns to education and to higher school nrollment. Together these findings suggest that agricultural productivity growth can play an important role in accelerating the fertility transition, as long as the economic benefits are large enough to translate into local economic development.