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Does Economic Uncertainty Have an Impact on Decisions to Bear Children? Evidence from Eastern Germany

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  • Sumon Kumar Bhaumik

    ()

  • Jeffrey B. Nugent

Abstract

Economic agents routinely face various types of economic uncertainty. Seldom have these various forms of uncertainty manifested themselves more sharply than in the transition economies of Central and Eastern Europe. In East Germany, the transition was especially rapid and sharp since East Germany virtually over night made the transition from the Eastern European system to the market economy of Western Germany. Uncertainties increased and many institutional and behavioral adjustments took place in a concentrated period of time. Among the latter was a sharp fall in fertility rates, leading to a growing literature on the explanation for this decline. This paper focuses directly on the link between uncertainty and childbearing decisions and examines the link at the micro level. It develops a stylized overlapping generations model showing that the relationship between economic uncertainty and childbearing decisions is not necessarily monotonic, and hence that the aforementioned inverse relationship is merely a testable hypothesis. It then uses GSOEP data for 1992 and 1996 to estimate the nature of this relationship, and concludes that while this relationship was indeed negative for East German women during these two years, the nature of uncertainty affecting their childbearing decisions differed across the years.

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Bibliographic Info

Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 491.

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Length: 28 pages
Date of creation: 01 Jul 2002
Date of revision:
Handle: RePEc:wdi:papers:2002-491

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Keywords: economic uncertainty; fertility; childbearing decisions; transition;

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References

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  1. Maja B. Micevska & Paul J. Zak, 2002. "What Accounts for the Emergence of Malthusian Fertility in Transition Economies?," Claremont Colleges Working Papers 2002-01, Claremont Colleges.
  2. Jennifer Hunt, 1997. "The Transition in East Germany: When is a Ten Point Fall in the Gender Wage Gap Bad News?," NBER Working Papers 6167, National Bureau of Economic Research, Inc.
  3. Witte, James C. & Wagner, Gert G., 1995. "Declining Fertility in East Germany After Unification: A Demographic Response to Socioeconomic Change," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 387-397.
  4. Arthur Lewbel, 1997. "Constructing Instruments for Regressions with Measurement Error when no Additional Data are Available, with an Application to Patents and R&D," Econometrica, Econometric Society, vol. 65(5), pages 1201-1214, September.
  5. Adriaan S. Kalwij, 2000. "The effects of female employment status on the presence and number of children," Journal of Population Economics, Springer, vol. 13(2), pages 221-239.
  6. Michaela Kreyenfeld, 2000. "Employment careers and the timing of first births in East Germany," MPIDR Working Papers WP-2000-004, Max Planck Institute for Demographic Research, Rostock, Germany.
  7. Michaela Kreyenfeld, 2000. "Educational attainment and first births: East Germany before and after unification," MPIDR Working Papers WP-2000-011, Max Planck Institute for Demographic Research, Rostock, Germany.
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Cited by:
  1. Elena Koytcheva & Dimiter Philipov, 2008. "Bulgaria: Ethnic differentials in rapidly declining fertility," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 19(13), pages 361-402, July.
  2. Dimiter Philipov, 2002. "Fertility in times of discontinuous societal change: the case of Central and Eastern Europe," MPIDR Working Papers WP-2002-024, Max Planck Institute for Demographic Research, Rostock, Germany.
  3. Sunnee Billingsley, 2010. "The Post-Communist Fertility Puzzle," Population Research and Policy Review, Springer, vol. 29(2), pages 193-231, April.
  4. Johannes Huinink & Michaela Kreyenfeld, 2004. "Family formation in times of social and economic change: an analysis of the 1971 East German cohort," MPIDR Working Papers WP-2004-013, Max Planck Institute for Demographic Research, Rostock, Germany.
  5. Michaela Kreyenfeld, 2005. "Economic uncertainty and fertility postponement: evidence from German panel data," MPIDR Working Papers WP-2005-034, Max Planck Institute for Demographic Research, Rostock, Germany.
  6. Michaela Kreyenfeld & Gunnar Andersson & Ariane Pailhé, 2012. "Economic Uncertainty and Family Dynamics in Europe," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 27(28), pages 835-852, December.
  7. Michaela Kreyenfeld & Gunnar Andersson & Ariane Pailhé, 2012. "Economic uncertainty and family dynamics in Europe (Introduction to special issue of Demographic Research)," MPIDR Working Papers WP-2012-006, Max Planck Institute for Demographic Research, Rostock, Germany.

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