Dynamic modeling of fertility and labour market participation of married or cohabiting women
AbstractWe jointly model fertility and participation decisions of women who live in couple using a dynamic model. In this paper we analyze the labour supply and the fertility decisions of married or cohabiting women in France, Spain, Germany, UK and Denmark. We estimate, for the period going from 1994 to 2001, a dynamic bivariate probit model with random effects using the ECHP (European Community Household Panel) and using a simulated maximum likelihood estimator. These estimates are made on an annual basis taking into account the initial conditions problem. The decisions of participation and fertility of women who live in couple depend on the individual characteristics (observed or unobserved) and are characterized by a significant state dependence. Our results suggest that the decisions of employment and fertility cannot be modeled separately. The difference of fertility across these countries is explained by individual characteristics and variations of social and fiscal policies across countries. However, the unobserved components of heterogeneity also play a central role in the observed differences across countries. We show the importance of the permanent income component in the participation decision. Random effects are negatively correlated across the equations of the model. Consequently, women who, a priori, prefer to have a higher consumption have weaker preferences for fertility.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2010017.
Date of creation: 30 Apr 2010
Date of revision:
Participation; Heterogeneity; Simulation based estimation; Panel data;
Other versions of this item:
- Cyriaque Edon & Thierry Kamionka, 2010. "Dynamic Modeling of Fertility and Labour Market Participation of Married or Cohabiting Women," Working Papers 2010-09, Centre de Recherche en Economie et Statistique.
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-06-18 (All new papers)
- NEP-EUR-2010-06-18 (Microeconomic European Issues)
- NEP-LAB-2010-06-18 (Labour Economics)
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