Study on the Optimal Fertility Choice Based on Household Utility Function

Abstract

Under the background of implementing the “two-child policy” in China, this paper builds the overlapping generation household utility model which includes the parents’ salary level and their children’s expected income level. This study finds that economic costs, the time of childcare and the household utility elasticity of consumption have negative impact on the household optimal fertility choice. The father’s salary level, the household utility elasticity of child-bearing and the children’s income elasticity of human capital investment have a positive effect on the choice of optimal childbirth while the impact of mother’s salary level is uncertain. At the end of this paper, we put forward some suggestions on how to effectively promote the “two children’s policy”.