We examine Becker's (1960) contention that children are “normal.” For the cross-section of non-Hispanic white married couples in the United States, we show that when we restrict comparisons to similarly educated women living in similarly expensive locations, completed fertility is positively correlated with the husband's income. The empirical evidence is consistent with children being “normal.” In an effort to show causal effects, we analyze the localized impact on fertility of the mid-1970s' increase in world energy prices, an exogenous shock that substantially increased men's incomes in the Appalachian coal-mining region. Empirical evidence for that population indicates that fertility increases with men's income..

In the United States, black workers earn less than their white counterparts and have higher rates of unemployment. Empirical work indicates that most of this wage gap is accounted for by differences in cognitive skills that emerge at an early age. In this paper, we demonstrate that the same is not true for black-white disparity in unemployment. A large unexplained unemployment differential motivates the paper's second contribution—a potential theoretical explanation. This explanation is built around a model that embeds statistical discrimination into the subjective worker evaluation process that lies at the root of the efficiency-wage theory of equilibrium unemployment.