This paper assesses quantitatively the effect of family fiscal policies on fertility, labour supply and parental childcare using a general equilibrium model with dynastic households. The introduction of time allocation decisions in the original Barro-Becker framework allows to reconcile the conclusion of the micro-econometric literature on pro-nativist fiscal policies, where such policies have a small effect on fertility, and the theoretical macroeconomic literature, where fertility is deemed to be elastic with respect to macroeconomic shocks. The use of indirect inference for calibrating the elasticity of fertility to fiscal subsidies enables the model to reproduce what observed in US data over the period 1905-2005.

Complete article