Fertility and Labor Share of Child Care Service

Our paper presents an examination of how preferences for rearing children affect fertility and income growth. As described in reports of the related literature, an aging society with an increase in life expectancy reduces fertility because the preference for children decreases relatively. However, in the model with the endogenous child care service price, a decrease in preference for children does not always reduce fertility because a decrease in the price of child care service raises fertility. Then, income growth can not decrease because fertility does not always increase. The subsidy for child care service increases both the share of using child care service and the labor share of the child care service sector. Then, the wage rate of the child care service sector rises, too.