Differential Fertility, Human Capital, and Development

Using micro-data from 48 developing countries, I document a recent reversal in the income-fertility relationship and its aggregate implications. Before 1960, children from larger families had richer parents and obtained more education. By century's end, both patterns had reversed. Consequently, income differentials in fertility historically raised average education but now reduce it. While the reversal is unrelated to changes in GDP, women's work, sectoral composition, or health, half is attributable to rising aggregate education in the parents' generation. The results support a model in which rising skill returns lowered the minimum income at which parents invest in education.