Question:
I am come from Pakistan, which is a poor country. I was having discussion with a good friend that should a country like Pakistan control it's population or not.In my personal opinion, due to abject poverty, it makes a lot of sense to control the population, however my friend was of the opinion that based on reality on the ground, poor people need to have more children that will support them financially by doing jobs and bringing more cash home. If a poor family has 1 or 2 children, then the economic contributors to support family living would be less and the family would find basic survival more difficult, i.e. to make ends meet.
So, from an economist's point of view, what is the better option for a poor family from a poor country, to control its family offspring or have more offspring that will support it to make ends meet?
Answer:
Both opinion from you and your friends make sense but there are some important factors missing. The decision of having one more child or not depends on how parents weigh benefit versus the cost associated with that child. The cost of having a child mainly consists of goods and time cost.
As you mentioned, poor families tend to living at the subsistence level. With low consumption, it’s hard for them to afford the goods cost of raising a child. By controlling for the population, they can save more resources for other family members, and substitute quantity of children for higher quality of every child. In this way the family might improve their economic status down the road. This is also the considerations held by some policy makers who support family planning programs aiming at reducing fertility rates. But this argument has some fundamental issue. Although parents wish and make efforts for their children to have high quality, including having high consumption, education, high earning, etc., altruistic parents also enjoy a large family with many children because they derive happiness from all children’s utility or happiness, even if they don’t get any financial support back from their grown-up children. When parents care about both number and the welfare of every child, family planning policies restricting fertility only results in higher average consumption and production, but lower welfare (utility). As discussed by Cordoba and Liu (2014), in absence of the restriction, parents would choose the best fertility, consumption and transfer choice for them. Such choice might feature a large family with low consumption for each. Such family planning policies reduce the set of feasible choices and invariably reduces individual welfare. Another factor that motivates poor parents to have more children is the low time cost low-income parents face due to their low wage. For them spending time raising children are not that much costly compared with rich parents whose time cost is high.
Your friend holds the view that poor families should have more children because they help support the family financially when they grow up. That’s true in old times or in economies in which agriculture is more important. Considering the current legal restriction on parents in controlling for grown-up children’s earnings in many countries around the world, this channel may fail to work. Even if some children may be altruistic toward parents, the amount financial expenditure returned from children to parents is typically small compared with the cost of raising them and the transfer from parents to children. However Cordoba and Liu (2014) replicate the empirical evidence that low-income parents give birth to more children than high-income parents but for different reason from what your friend proposed. It generates from the low time cost of raising every child mentioned above and the mean-reversion expectations by altruistic parents who gain utility from their children’s utility. Low (high)-income parents expect their children to be on average of higher (lower) income. This, together with the low time cost motivates poor parents having more children.
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Altruism, Fertility, and Risk, Cordoba and Liu, Staff General Research Papers 37481, 2014, Iowa State University, Department of Economics.