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On the Relationship between Business Cycle and Fertility Rate in Taiwan: Evidence from the Nonlinear Cointegration Methodology

Author

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  • Yu-Hu LIN

    (Department of Business Administration, Nan Kai University of Technology, NanTou, Taiwan)

  • Wen-Yi CHEN

    (Department of Senior Citizen Service Management, National Taichung University of Science and Technology, Taichung, Taiwan)

Abstract

This study employs, for the first time, the nonlinear ARDL cointegration methodology to examine the potentially asymmetric responses of fertility rate to business cycle after extensively controlling for prevalence of education, crude marriage and crude death rates in Taiwan over the period from 1950 to 2015. Our results suggest that there is an asymmetric effect of business cycles on total fertility rate. Both economic boom (in terms of an increase in real GDP per capita) and recession (in terms of a decrease in real GDP per capita) will decrease fertility rate. The effect of economic recession dominates that of economic boom. Policy implications generated from our results include the ideas that intervention designed to increase female fertility should put more emphasis on reducing the substitution effect of childbearing (such as the provision of care for children) during economic boom periods, while subsidies for childbearing and care for children that could sufficiently reduce the income effect of childbearing should be given during economic recession periods.

Suggested Citation

  • Yu-Hu LIN & Wen-Yi CHEN, 2018. "On the Relationship between Business Cycle and Fertility Rate in Taiwan: Evidence from the Nonlinear Cointegration Methodology," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 140-156, December.
    • Handle: RePEc:rjr:romjef:v::y:2018:i:1:p:140-156
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    More about this item

    Keywords

    low fertility; business cycle; NARDL; ARDL; asymmetry;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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