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Fixed-term Employment and Fertility: Theory and Evidence from German Micro Data

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  • Auer, Wolfgang
  • Danzer, Natalia
  • Rainer, Helmut
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    Abstract

    In Germany, it has become conventional wisdom that the economic uncertainty associated fixed-term employment contracts prevents young couples from realizing their desire to have children. From a research perspective, it is however far from clear whether fixed-term contracts are the obstacle to family formation that the public a priori expect them to be. In this paper, we first develop a simple dynamic bargaining model that allows us to ask theoretically: under what conditions will couples choose to have children early on in life, postpone it to later in life, or decide to remain childless? And: to what extent does the economic uncertainty associated with holding fixed-term employment contract affect these choices? We obtain two theoretical predictions. On the one hand, job uncertainty at the beginning of women's employment careers causes couples to postpone parenthood. On the other hand, job uncertainty in women's mid-career lives causes couples to enter parenthood instead of remaining voluntarily childless. We bring these theoretical predictions to data from the German Socio-Economimc Panel (SOEP). Ordinary least squares and fixed-effects estimations show that, at the beginning of women's employment careers, holding a fixed-term employment contract and the probability of entering parenthood are negatively correlated. When considering women in their mid-career lives, holding a fixed-term contract has a positive impact on the probability of entering parenthood. --

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    Paper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order with number 79894.

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    Date of creation: 2013
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    Handle: RePEc:zbw:vfsc13:79894

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    1. Rainer, Helmut & Selvaretnam, Geethanjali & Ulph, David, 2008. "Assisted Reproductive Technologies (ART) in a model of fertility choice," ISER Working Paper Series 2008-02, Institute for Social and Economic Research.
    2. Pedro Mira & Namkee Ahn, 2001. "Job bust, baby bust?: Evidence from Spain," Journal of Population Economics, Springer, vol. 14(3), pages 505-521.
    3. Gary S. Becker, 1981. "A Treatise on the Family," NBER Books, National Bureau of Economic Research, Inc, number beck81-1.
    4. Lundberg, S. & Pollak, R.A., 1991. "Separate Spheres Bargaining and the Marriage Market," Working Papers 91-08, University of Washington, Department of Economics.
    5. Weiss, Yoram & Willis, Robert J, 1985. "Children as Collective Goods and Divorce Settlements," Journal of Labor Economics, University of Chicago Press, vol. 3(3), pages 268-92, July.
    6. Rainer, Helmut & Selvaretnam, Geethanjali & Ulph, David, 2011. "Assisted reproductive technologies (ART) in a model of fertility choice," Munich Reprints in Economics 19815, University of Munich, Department of Economics.
    7. Sara Rica & Amaia Iza, 2005. "Career Planning in Spain: Do Fixed-term Contracts Delay Marriage and Parenthood?," Review of Economics of the Household, Springer, vol. 3(1), pages 49-73, November.
    8. Angelika Tölke & Martin Diewald, 2003. "Insecurities in employment and occupational careers and their impact on the transition to fatherhood in Western Germany," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 9(3), pages 41-68, September.
    9. David H. Autor, 2003. "Outsourcing at Will: The Contribution of Unjust Dismissal Doctrine to the Growth of Employment Outsourcing," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 1-42, January.
    10. Leibenstein, Harvey, 1975. "The Economic Theory of Fertility Decline," The Quarterly Journal of Economics, MIT Press, vol. 89(1), pages 1-31, February.
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