Women's Education, Employment, and Cost of Family Formation: A Structural Analysis of Fertility Decline in Korea

This study examines the factors underlying the sharp decline in marriage and fertility rates by integrating microdata analysis with a structural macroeconomic model. Drawing on 25 years of individual-level panel data from the Korean Labor and Income Panel Study, it employs discrete-time survival models to examine how individual and regional factors influence the incidence of first marriage and childbirth. The findings show that rising educational and marriage-related expenses significantly reduce the likelihood of marriage, whereas increased female labor force participation and escalating child education costs are associated with lower probabilities of childbirth. These empirical patterns motivate a dynamic overlapping-generations model with endogenous family formation, human capital investment, and intra-household bargaining. The model incorporates gender-based differences in partner matching and household labor, which influence time allocation and marriage utility, particularly for college- educated women. Simulation results indicate that rising marriage and child-rearing costs have been the primary drivers of declining family formation since 1990, while increases in women's education have played a modest role. The findings further suggest that a package of targeted policies--such as childcare and education support, marriage-cost subsidies, and gender-equalizing reforms in households and the labor market--could raise the fertility rate from 0.75 to around 1.2, a level comparable to that of other low-fertility advanced countries.