Ugo Bolletta: ugo.bolletta2[at]unibo.it
Mathieu Faure: mathieu.faure[at]univ-amu.fr
In this paper, we investigate the relationship between income shocks, fertility and optimal investment in children over a long period of time and a large set of countries. We use data on more than 1.6 million women and 4 million children from multiple waves of the Demographic and Health Survey (DHS), combined with information on the exposure to variation in prices of locally produced crops to study how income variations affect the quantity and quality of children. In addition, we investigate whether such income changes, through their immediate effects on child nutrition and health, might permanently affect the intra-household allocation of resources among children. Our preliminary results show both a positive relationship between income and fertility and a positive relationship between favorable early life conditions and long term investment in children: households do allocate resources to their "sweetest" child throughout her childhood.