Adherence to cultural norms and economic incentives: Evidence from fertility timing decisions

Abstract

I analyze the interplay between culture and economic incentives in decision-making. To this end, I study fertility timing decisions of second generation migrant women to France and the US. While I confirm that originating from a high fertility country correlates to having larger families, I also find that it does not predict earlier entry into motherhood. I propose a model that rationalizes these findings in which decisions are the result of a trade-off between an economic cost-benefit analysis and a cultural norm. The model predicts that decisions with a higher cost of deviation from the economic optimum should be less prone to cultural influence. This is consistent with substantial evidence showing that the timing of the first birth bears much larger costs for mothers in terms of labor market outcomes than that of subsequent births.