Agricultural Productivity and Fertility Rates: Evidence from the Oil Palm Boom in Indonesia

Abstract

We analyze the link between agricultural productivity growth and fertility rates, using the oil palm boom in Indonesia as an empirical setting. We find consistent negative effects of oil palm expansion on fertility during the period 1996-2016. This finding appears to be linked to rising farm profits that led to consumption growth, an expansion of the non-agricultural sector, increasing wage returns to education and higher school enrollment. Together, these findings suggest that agricultural productivity growth can play an important role in accelerating the fertility transition, as long as the economic benefits are large enough to translate into local economic development.