Social surrogacy: Market design and implications for fertility

We investigate theoretically the introduction of a market for commercial surrogacy for social motives. Agents have heterogeneous incomes and preferences for parenthood, and face pregnancy-related income reductions. In equilibrium, low-income agents provide surrogacy for high-income agents who seek “insurance” against income loss and would not become parents without surrogacy. Surrogacy has an ambiguous effect on fertility: it increases fertility only if the latter is low without surrogacy. Otherwise, its impact on fertility is negative. • This paper examines social surrogacy, chosen due to concerns about the labour market. • Agents have heterogeneous incomes and thus different roles in the surrogacy market. • Surrogacy increases welfare but has an ambiguous effect on fertility. • When current fertility is low (high), surrogacy would increase (reduce) it.