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Female Employment and Fertility - The Effects of Rising Female Wages

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  • Christian Siegel

Abstract

Increases in female employment and falling fertility rates have often been linked to rising female wages. However, over the last 30 years the US total fertility rate has been fairly stable while female wages have continued to grow. Over the same period, we observe that women's hours spent on housework have declined, but men's have increased. I propose a model with a shrinking gender wage gap that can capture these trends. While rising relative wages tend to increase women's labor supply and, due to higher opportunity cost, lower fertility, they also lead to a partial reallocation of home production from women to men, and a higher use of labor-saving inputs into home production. I find that both these trends are important in understanding why fertility did not decline to even lower levels. As the gender wage gap declines, a father's time at home becomes more important for raising children. When the disutilities from working in the market and at home are imperfect substitutes, fertility can stabilize, after an initial decline, in times of increasing female market labor. That parents can acquire more market inputs into child care is what I find important in matching the timing of fertility. In a mode l extension, I show that the results are robust to intrahousehold bargaining.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp1156.

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Date of creation: Jul 2012
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Handle: RePEc:cep:cepdps:dp1156

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: Fertility; female labor supply; household production; intrahousehold allocations;

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References

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  1. Gary S. Becker, 1960. "An Economic Analysis of Fertility," NBER Chapters, in: Demographic and Economic Change in Developed Countries, pages 209-240 National Bureau of Economic Research, Inc.
  2. Doepke, Matthias & Hazan, Moshe & Maoz, Yishay D., 2007. "The Baby Boom and World War II: A Macroeconomic Analysis," IZA Discussion Papers 3253, Institute for the Study of Labor (IZA).
  3. Jess Benhabib & Richard Rogerson & Randall Wright, 1991. "Homework in macroeconomics: household production and aggregate fluctuations," Staff Report 135, Federal Reserve Bank of Minneapolis.
  4. Gary Hansen, 2010. "Indivisible Labor and the Business Cycle," Levine's Working Paper Archive 233, David K. Levine.
  5. Oded Galor & David N. Weil, 1993. "The Gender Gap, Fertility, and Growth," NBER Working Papers 4550, National Bureau of Economic Research, Inc.
  6. Valerie Ramey & Garey Ramey, 2009. "The Rug Rat Race," 2009 Meeting Papers 431, Society for Economic Dynamics.
  7. Domeij, David & Floden, Martin, 2001. "The labor-supply elasticity and borrowing constraints: Why estimates are biased," Working Paper Series in Economics and Finance 480, Stockholm School of Economics.
  8. Claudia Olivetti, 2006. "Changes in Women's Hours of Market Work: The Role of Returns to Experience," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(4), pages 557-587, October.
  9. Jeremy Greenwood & Ananth Seshadri & Guillaume Vandenbroucke, 2005. "The Baby Boom and Baby Bust," American Economic Review, American Economic Association, vol. 95(1), pages 183-207, March.
  10. Albanesi, Stefania & Olivetti, Claudia, 2007. "Gender Roles and Technological Progress," CEPR Discussion Papers 6352, C.E.P.R. Discussion Papers.
  11. James Feyrer & Bruce Sacerdote & Ariel Dora Stern, 2008. "Will the Stork Return to Europe and Japan? Understanding Fertility within Developed Nations," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 3-22, Summer.
  12. Andrés Erosa & Luisa Fuster & Diego Restuccia, 2005. "A Quantitative Theory of the Gender Gap in Wages," Working Papers tecipa-199, University of Toronto, Department of Economics.
  13. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
  14. John Knowles, 2005. "Why are Married Men Working So Much?," PIER Working Paper Archive 05-031, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
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  1. Female Employment and Fertility - The Effects of Rising Female Wages
    by UDADISI in UDADISI on 2012-08-01 15:07:00
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Cited by:
  1. Pierre-Richard Agénor & Baris Alpaslan, 2013. "Child Labor, Intra-Household Bargaining and Economic Growth," Centre for Growth and Business Cycle Research Discussion Paper Series 181, Economics, The Univeristy of Manchester.
  2. Macan, Vaneza Jean & Deluna, Roperto Jr, 2013. "Relationship of Income Inequality and Labor Productivity on Fertility in the Philippines: 1985-2009," MPRA Paper 51679, University Library of Munich, Germany.

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