OBJECTIVES: What triggers initial shifts to fertility limitation as populations undergo socioeconomic development remains poorly understood. Alternative models emphasize the social contagion of low fertility ideals, or the individual perception of economic and/or fitness benefits to fertility limitation. Few micro-level studies in communities experiencing the earliest stages of the demographic transition are available. In a previous study, we found little support for the role of social transmission through friendships and spatial networks in explaining contraceptive uptake in rural Ethiopia, where contraceptive prevalence is low (<20%). Here, using data from the same population, we investigate the possibility that early contraceptive uptake is best understood as a manipulation of parental investment in response to local environmental change. METHODS: We used data on >800 women which recorded fertility, birth spacing and offspring survivorship. We first investigated whether ever-users and non-users differ in their reproductive behavior and success prior to contraception use. We then conducted a within-women analysis to investigate the impact of contraceptive uptake on reproduction and child survivorship. RESULTS: Women who have experienced higher fertility and higher child survival adopt modern contraception sooner rather than later, and contraceptive use among early adopters is predictive of greater birth spacing. However, contraceptive uptake does not have an impact on offspring survivorship. CONCLUSIONS: Our data provide support for the idea that preferences for low fertility emerge in response to increasing competition between offspring. The study has implications for our understanding of the emergence of local fertility norms and the spread of modern birth control.