Esther Gehrke (U California, Berkeley, USA) Technical change and fertility: Evidence from the oil palm boom in Indonesia

We analyze the link between fertility and the oil palm expansion in Indonesia - a skill-neutral labor-saving technical change within agriculture. During the time period 1996 to 2016, we find consistently negative effects of the oil palm expansion on fertility. We also find that rising farm profits led to consumption growth, an expansion of the non-agricultural sector and increasing returns to education. Taken together our results suggest that the negative fertility effect is driven by income growth at the household level, but also indirectly by local economic development. Both mechanisms triggered investments in children’s and women’s education. We analyze the link between fertility and the oil palm expansion in Indonesia - a skill-neutral labor-saving technical change within agriculture. During the time period 1996 to 2016, we find consistently negative effects of the oil palm expansion on fertility. We also find that rising farm profits led to consumption growth, an expansion of the non-agricultural sector and increasing returns to education. Taken together our results suggest that the negative fertility effect is driven by income growth at the household level, but also indirectly by local economic development. Both mechanisms triggered investments in children’s and women’s education.