Microeconomics

Asma Rashidah Idris · Muzafar Shah Habibullah · Badariah Haji Din ·Jurnal Ekonomi Malaysia ·2018

The “old-age security” and “complete substitutability” hypotheses suggest that fnancial market can affect individuals’ decision to have less or more children. It has been recognised in the literature that at low level of fnancial development, children are considered an asset and a form of investment that could provide returns and security during old age. However, at higher level of fnancial development, individuals have more access to the fnancial market that can provide funds and fnancing during old age and as a result the demand for children is less. Furthermore, increase in female labour participation rate in the fnancial industry as well as in other economic sectors will also induce demand for fewer children. In Malaysia, the development of banks as well as the non-banking fnancial institutions has broadened credit accessibility to households and it could affects household’s decisions over the number of children they should have. Thus, the present paper empirically investigates the long-run relationship between fertility rate, fnancial development, income and household consumption in Malaysia for the period 1975 to 2013. In this study we employed the autoregressive distributed lag (ARDL) modelling approach for the testing of cointegration. Our results suggest that fnancial development and household consumption expenditure are negatively related to fertility rate, while fertility rate portrays a non-linear long-run relationship with income, thus exhibiting an inverted U-shaped curve with income in Malaysia.

Siew-Pong Cheah · Lin-Sea Lau · Chee-Keong Choong ·International Journal of Economics and Management ·2021 ·JEL: D3, D63, G51

Most past studies have assumed a symmetric relationship between income distribution and household indebtedness. Therefore, linear or symmetric modelling would miss possible asymmetric relationships between income distribution and household debt, resulting in misleading conclusions and policy suggestions. Thus, this study has explored the potential asymmetries between household debt and income inequality within long-run and short-run relationships. This study discovered that the association between income inequality and household debt was asymmetric in the long and short run using the nonlinear autoregressive distributed lag model. The results showed that only decreases in income inequality had a significant and positive effect on household debt, while increases in income inequality did not have a significant effect. The findings emphasised the need for policies to reduce income inequality to lessen debt among Malaysian households.