Effective Boost to Fertility: Evidence from Operation of Nuclear Power Plants in Japan

We provide evidence of a boost to fertility caused by nuclear power plants' operation as such power plants create jobs in the surrounding area. We use household-level data from the Japanese population census (1980-2010) and link each household to granular location information. We exploit—plausibly exogenous—geographical variations in distance to a nuclear power plant from each household to identify the job creation effect. We find that the operation of a nuclear power plant leads to a 10% increase in fertility in the surrounding areas—which is an underpopulated area. We also find that marriage and employment increase in areas close to a nuclear power plant. The estimates of instrumented difference-in-difference method suggest that an additional employment leads to a higher probability of having children born. On top of that, this work sets out to investigate the effect of large subsidies provided to local governments after the constructions of nuclear power plants. We utilize observations of households located close to the borders of the municipality to identify the causal impact of local government spending on fertility decision. The results suggest that having a larger local government’s budget and subsequent provision of better-quality public services contribute to higher fertility.