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Why are Fertility and Female Participation Rates Positively Correlated across OECD countries?

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  • José María Da Rocha
  • Luisa Fuster

Abstract

The aim of this paper is to understand recent observations of fertility, female employment, and participation rates in O.E.C.D. countries. These observations indicate that fertility rates are positively correlated with female employment ratios and participation rates across O.E.C.D. countries during the period 1985-1996. Moreover, the time series observations show that fertility rates are procyclical in developed countries. Economic theories of fertility developed after the seminal work of Mincer (1962) and Becker (1965) are consistent with secular trends of fertility and female employment but do not account for these recent observations. In this paper we explore the role of labor market frictions in understanding the positive association between fertility and employment among O.E.C.D. countries. To this end we develop a framework of fertility and labor market participation decisions which is designed to quantitatively study the impact of labor market frictions on the timing of births, the fertility rate, and the labor market participation of females. We find that unemployment induces females to postpone and space births which, in turn, reduces the total fertility rate. In our framework, economies with a high unemployment rate are characterized by a low fertility rate, female participation, and female employment ratio. We also find that in our framework, differences in unemployment rates similar to the ones observed among O.E.C.D. countries, can generate a positive correlation between fertility and labor market participation rates. Interestingly, a temporary shock that increases job destruction can generate a decrease of the fertility rate and of the female employment ratio that mimics time series observations of Sweden during the 90's.

Suggested Citation

  • José María Da Rocha & Luisa Fuster, 2003. "Why are Fertility and Female Participation Rates Positively Correlated across OECD countries?," Working Papers 72, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:72
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    File URL: http://www.barcelonagse.eu/sites/default/files/working_paper_pdfs/72.pdf
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    References listed on IDEAS

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    1. S. Rao Aiyagari & Jeremy Greenwood & Nezih Guner, 2000. "On the State of the Union," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 213-244, April.
    2. Juan Carlos Conesa, 2002. "Educational attainment and timing of fertility decisions," Working Papers in Economics 78, Universitat de Barcelona. Espai de Recerca en Economia.
    3. Hector Chade & Gustavo Ventura, 2002. "Taxes and Marriage: A Two-Sided Search Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(3), pages 955-986, August.
    4. Elizabeth M. Caucutt & Nezih Guner & John Knowles, 2001. "The Timing of Births: A Marriage Market Analysis," Penn CARESS Working Papers 49355d43c11f2314075e8b54e, Penn Economics Department.
    5. Andres Erosa & Luisa Fuster & Diego Restuccia, 2002. "Fertility Decisions and Gender Differences in Labor Turnover, Employment, and Wages," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(4), pages 856-891, October.
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    Citations

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    Cited by:

    1. Tomas Kögel, 2006. "An explanation of the positive correlation between fertility and female employment across Western European countries," Discussion Paper Series 2006_11, Department of Economics, Loughborough University.
    2. Tomas Kögel, 2006. "Swedish Family Policy, Fertility and Female Wages," Discussion Paper Series 2006_7, Department of Economics, Loughborough University.
    3. Virginia Sanchez Marcos & Ezgi Kaya & Nezih Guner, 2017. "Labor Market Frictions and Lowest Low Fertility," 2017 Meeting Papers 1015, Society for Economic Dynamics.
    4. Andres Erosa & Luisa Fuster & Diego Restuccia, 2002. "Fertility Decisions and Gender Differences in Labor Turnover, Employment, and Wages," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(4), pages 856-891, October.

    More about this item

    Keywords

    Total fertility rates; female employment ratios; unemployment; timing of births;

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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