We study how fertility affects household size, composition, and poverty in Nepal.
The gender of the first child serves as an IV for the total number of children.
New births immediately increase the household size, but reduce it in the longer run.
In the longer run, couples with fewer children host more other relatives.
Changes in fertility may have ambiguous impacts on consumption over the life cycle.
Population control policies keep attracting attention: by increasing the household size, having more children would directly contribute to a household’s poverty. Using nationally representative household level data from Nepal, we investigate the links between a household’s fertility decisions and variations in their size and composition. We show that the relationship between number of births and household size is positive when the mothers are young, but becomes negative as the mothers grow older. Elderly couples who had fewer children host, on average, more relatives who are outside the immediate family unit. This result sheds light on the heterogeneous relation between the number of children and household size over the life cycle. It also implies that reductions in a household’s fertility may have an ambiguous impact on its per capita consumption, which depends on how the household’s composition responds to new births and changes over time: in this sample, an old household’s per capita consumption is not affected by the number of births. We use the gender of the first-born child to instrument the total number of consecutive children.
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