Aggregate Effects of the Egg-Freezing Technology and Policy Implications

• Applicant: Professor Dr. Alexander Ludwig
• Subject Area: Economic Theory ; Economic Policy, Applied Economics
• Term: since 2022
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 462655750

Assisted reproductive techniques such as in-vitro fertilization (IVF) are increasingly becoming standard elements of fertility decisions as they circumvent the infertility constraints generated by delayed childbearing or biological characteristics of the couple. E.g., in Denmark, where the first three IVF treatments are subsidized, about 5% of all children were born after IVF in 2009. With new technological developments, women can freeze their eggs for future use to increase the chances of a life-birth after an IVF procedure. According to the Danish health authority, a total of 39,974 fertility treatments were undertaken in Denmark in 2019. These treatments lead to 7,465 pregnancies, 2,260 of which used frozen eggs (a fourfold increase compared to 2013). Similar increases are documented for the US, UK or Australia. Firms increasingly offer egg freezing as a wage perk of an employment contract. For example, in 2019, 5%, 13%, respectively 17% of all American companies with more than 500, 5,000, respectively 20,000, employees offer egg freezing as a benefit to female employees.The first objective of this research project is to characterize the demand of women for egg freezing and later IVF treatment in a life-cycle model with endogenous education, labor market participation and fertility. We will use a calibrated version of this model to investigate how the demand for egg freezing changes if its cost is entirely subsidized ─ as, e.g., in Denmark ─ and how this affects outcomes over the life cycle. As the second objective, we will bring in the firm’s perspective and model the motives for firms to offer egg freezing as a work perk of the optimal labor contract. The egg freezing technology provides insurance and at the same time enables firms to extract private information about the women’s preferences for children. We will bring together women and firms in a labor market matching model to characterize the optimal employment contract. Our model will provide an argument for why it may be optimal for females to reveal through the adoption of the egg freezing technology, at least partially, their unobserved preferences for children to firms as well as their willingness to delay child birth. Both public policy subsidizing egg-freezing and firms offering egg freezing as a work perk may have interesting effects on the gender wage gap, the effects of children on wages and on completed fertility. In order to calibrate our model, we will conduct empirical analyses on the basis of Danish registry data in order to measure success probabilities of IVF treatments (with and without prior egg freezing). We will complement this data analysis by a survey to measure subjective expectations of females on the success of egg-freezing and IVF treatments and their preferences for fertility in terms of early and late birth.

• DFG Programme: Research Units
• Subproject of: FOR 5399: Macroeconomic Implications of Intra-Household Decision Making
• International Connection: Italy