The notion that the cost of increasing family size depends upon the level of expenditures or investment per child (child quality), formalized in Becker and Lewis (1973) and Willis (1973), provides a rationale for the contemporaneous inter-country negative correlation between the schooling attainment of young persons and birth rates as well as the trends in these variables over time in developed countries during their demographic transition.A sufficient condition for fertility to fall and, say, schooling to rise as development proceeds in this framework is that the shadow-price constant income effect on quality per child 1 exceed that on numbers of children.Such an explanation, however, would appear :..o be of little value for those who hold that population growth itself impedes economic development (e.g., Coale and Hoover (1958)).From this perspective, the compensated substitution.implications of the theory are of concern, whereby price interventions which impinge on family size decisions can be used to accelerate pe~-capita income.The chief focus of policies aimed at reducing fertility in the absence of income growth appears to be on altering the "own" price of children through lowering information costs associated with contraceptive methdos in order to take advantage of recent innovations in birth control technolo~y.In this paper, we examine both theoretically and empirically the natalist impact of two alternative potential policies--reductions in the price of schooling and tech~ological innovation in the agricltural context--based on a rural household model in which (school) investments per child influence the cost of children as in the Becker-Lewis framework and in which the returns to schooling rise in a dynamic environment as a consequence of the allocative effect of education (Welch, 1970;Schultz, 1975).I show that, as a consequence of the "quantity-quality" interaction, reductions in the direct costs of schooling may raise fertility levels even if child schooling and the quantity of children are substitutes as conventionally defined and even if (observed) income effects are not positive.2,:. w

Although estimates of the fertility-labor supply relationship abound, a full appreciation of the interpretation of such estimates has been lacking, regardless of the empirical strategy employed. This paper attempts to elucidate, within the context of a life-cycle decision-making process, the information contained in the estimated association between fertility and labor supply as calculated from "single" and "simultaneous-equations" estimation techniques. We also present a statistical methodology based upon the occurrence of twins in the first pregnancy and provide estimates, using that methodology, of the extent to which women's life-cycle labor supply decisions respond to exogenous (and, in this case, unanticipated) extra children.

In this paper, we address the issues of whether reductions in fertility increase human capital investments per child and whether twinning can identify the quantity—quality (Q-Q) trade-off. We show that estimates of the effects of twinning at higher parities on the outcomes of older children in prior studies do not identify family-size effects but are confounded by inter-child allocation effects because of the endowment deficit and close spacing of twins. However, examining the effects of twinning by birth order, net of the effects stemming from the endowment deficit of twins, can provide upper and lower bounds on the trade-off between the family size and average child quality. Our estimates, based on data from China, indicate that an extra child at parity one or at parity two, net of one component of birth-endowment effects associated with birth weight, significantly decreases the schooling progress, the expected college enrolment, grades in school and the assessed health of all children in the family. Despite the evident significant trade-off between number of children and child quality in China, the findings suggest that the contribution of the one-child policy in China to the development of its human capital was modest.

Preliminary findings are presented from a research project which examined the interactions between informal risk sharing, index insurance and risk-taking. Rainfall insurance contracts were randomly offered to cultivating and landless households in a set of Indian villages where preexisting census data on caste networks allowed the characterization of the nature and extent of informal risk sharing. We study how informal risk sharing mediates the demand for index insurance, whether index insurance or informal indemnification allows farmers to invest in risky technologies, and the general equilibrium effects of offering insurance contracts to cultivators and agricultural laborers.