Standard economic theory offers a demand-and-supply view of fertility. With increasing economic development, higher income levels, dropping mortality rates, and increases in education levels resulting in increased female labor force participation, there is a decreased demand for children. These determinants of fertility could also be seen as “backward-looking” determinants since they deal with variables that have already happened to the person. Another theory for explaining decreased fertility could be the time preference theory, which is a “forward-looking” variable based on a person’s future expectations. Sexual freedom is seen as a measure of time preference and is expected to affect fertility. For this reason, we will study the impact of increasing sexual freedom on fertility, controlling for various state-level characteristics. To control for endogeneity between fertility and other explanatory variables, we will use fixed effects instrumental variable estimation.
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