In
this paper we study a theoretical link between the effects of increased
automation on labor markets, and the fertility decisions of a representative
household that is replaced by robots in the production of tasks. We develop a
framework in which children provide utility and impose an opportunity cost to
the household due to lost labor income. We
show that fertility rate changes are the result of an optimal response to wage
variations after the economy is hit by a shock that increases the design
quality of robots used in production. Using this model, we characterize an
initial equilibrium and simulate the effect of a 10% increase in robot
productivity on important endogenous variables, including wages, and find that,
in the absence of fixed costs to raising children, the fertility rate increases
by approximately 3.4%.
