91 | Page Poverty, Fertility and Child Labor: Does Demand Theory of Fertility Matter? An Exploratory Study in India Gargi Bhattacharya Assistant Professor, Economics Department Mahadevananda Mahavidyalaya, Barrackpore. Kolkata-700120 India Sushil K. Haldar Associate Professor, Department of Economics Jadavpur University, Kolkata-700032 India Abstract It is hypothesized that fertility, poverty and child labor are jointly determined variables; neither can be assumed to be an independent determinant of the other. In a simultaneous equation framework, we find that demand theory of fertility does hold good even at the lower level of income where the females are compelled to go outside home for cash in order to avoid destitute and they prefer less number of children. Therefore, in order to regulate fertility in India, one can suggest increasing female employment opportunity at the informal sector, since formal sector job is severely restricted in India. It is observed that child labor is caused by lower health status and poor human capital investment. Thus, if we increase the per capita social sector expenditure on education and healthcare, it directly augments enrollment of the children in school. Since health and education is treated as complementary to each other, a rise in social sector investment has some spillover benefits to the society. Keywords: Demand theory of fertility, Poverty, Female labor force participation in unorganized sector, Social sector expenditure 1. Introduction: Household economic theory of fertility which is known as demand theory was developed by Chicago- Columbia School led by Gary Becker during 1960s. The theory is based on microeconomic approach, assuming couples would have as many children as they could if children are costless in terms of money and opportunity cost of time. Demand theory of fertility hypothesize that the true income elasticities for both child quality and quantity are positive but as income increases, however, the couples demand higher quality children [Barro and Becker 1989]. Since higher quality children are more expensive, the couples now demand fewer children resulting negative income elasticity for the number of children. Despite considerable empirical evidence in support of the basic premises of demand theory of fertility decisions from the developed economies, the model has not found extensive applications to the developing countries like India. In contrast with Becker’s approach, the social theory of fertility decline points to changes in preferences as a result of social development, such as expansion of education in general and female education in particular. The social theory of fertility is multidisciplinary in nature and it is known as syntheses model based on social and economic variables. This syntheses model 1 of fertility has been