Is there an economic rationale for pronatalist policies? We propose and analyze a particular
market failure that leads to inefficiently low fertility in equilibrium. The friction is caused by
the lack of ownership of children: if parents have no claim on their childrenʼs income, the
private benefit from producing a child can be smaller than the social benefit. We analyze an
overlapping-generations (OLG) model with fertility choice and parental altruism. Ownership
is modeled as a minimum constraint on transfers from parents to children. Using the …