Southampton School of Social Sciences Small Grants Scheme is gratefully acknowledged.

Preliminary and incomplete – do not circulate Most countries seem to have experienced a shift in the property rights over children. While two centuries ago parents had extensive control over their chil-dren, laws have been implemented in many countries to curb these control rights and thereby essentially led to the self-ownership of children. In this paper, we first document these changes, then argue that the property right allocation alters the incentive to have children, and thereby may have contributed to the decline in fertility observed in the data. Further, we show that the lack of property rights that parents have over children today may indeed lead to inefficiently low fertility levels. This is an interesting break-down of Coase’s theorem, and we provide a de-tailed analysis of the mechanism responsible for the break-down. This mechanism holds in a variety of environments: with altruism, overlapping lives, heterogene-ity, infinite horizons. Finally, we address two additional issues. First, we relate our efficiency results to previous efficiency results in OLG models with and without altruism and with and without fertility choice and argue that property rights are key. Second, potential policy options, preserving the sovereignty of children, are analyzed. These include government debt and a PAYG social security system, both of which need to be designed not to distort fertility decisions