Rosenzweig, Mark R.Schultz, T. Paul2009-12-032009-12-031985-03Rosenzweig, M.R. and Schultz, T.P., (1985), "The Demand for and Supply of Births: Fertility and its Life-Cycle Consequences", Discussion Paper No. 211, Center for Economic Research, Department of Economics, University of Minnesota.https://hdl.handle.net/11299/55434This paper describes and implements a methodology for disentangling empirically in households the biologically-determined supply of births from the demand for births in order to assess the consequences of exogenous variations in fertility supply for household behavior. The estimation problems arising when there is heterogeneity both in preferences for family size and in the biological capacity to bear children (fecundity) are illustrated with a dynamic optimizing model incorporating stochastic fertility. The methodology is applied to monthly longitudinal data on contraceptive use, fertility, and female labor supply in the United States from 1970-75. The empirical results indicate that more than ten percent of the cross-sectional variation in the number of live births in the U.S. is due to interhousehold variation in the exogenous supply of births. Biologically determined fertility supply variation also significantly affects married women's labor supply and earnings. Moreover, use of actual fertility as a proxy for fertility supply results in underestimates of contraceptive effectiveness, and to biased estimates of the consequences of exogenous variations in fertility supply for couples' choice of contraceptives, for female earnings, and for the labor supply of married women. University of Minnesota,en-USWorking Paper