Why do fertility rates vary so much across countries? Why are European fertility rates so much lower than American fertility rates? To answer these questions we extend the Barro—Becker framework to incorporate the decision to accumulate human capital (which determines earnings) and health capital (which determines life span). We find that cross-country differences in productivity and taxes go a long way toward explaining the observed differences in fertility and mortality.

We estimate a life-cycle model of consumption, human capital investment, and labor supply. The interaction between human capital and labor supply toward the end of the life cycle is most novel. The estimates replicate the main features of the data, in particular the large increase in wages and small increase in labor supply at the beginning of the life cycle and the small decrease in wages but large decrease in labor supply toward the end. We show that incorporating human capital is critical when analyzing changes to Social Security.

We solve each household’s optimal saving decisions using a life cycle model that incorporates uncertain lifetimes, uninsurable earnings and medical expenses, progressive taxation, government transfers, and pension and social security benefits. With optimal decision rules, we compare, household by household, wealth predictions from the life cycle model using a nationally representative sample. We find, making use of household‐specific earnings histories, that the model accounts for more than 80 percent of the 1992 cross‐sectional variation in wealth. Fewer than 20 percent of households have less wealth than their optimal targets, and the wealth deficit of those who are undersaving is generally small.

Electricity was born at the dawn of the last century. Households were inundated with a ood of new consumer durables. What was the impact of this consumer durable goods revolution? It is argued here that the consumer goods revolution was conducive to liberating women from the home. To analyze this hypothesis, a Beckerian model of household production is developed. Households must decide whether or not to adopt the new technologies, and whether a married woman should work. Can such a model help to explain the rise in married female labor-force participation that occurred in the last century? Yes.

What caused the baby boom? And can it be explained within the context of the secular decline in fertility that has occurred over the last 200 years? The hypothesis is that: (a) The secular decline in fertility is due to the relentless rise in real wages that increased the opportunity cost of having children; (b) The baby boom is explained by an atypical burst of technological progress in the household sector that occurred in the middle of the last century. This lowered the cost of having children. A model is developed in an attempt to account, quantitatively, for both the baby boom and bust.