Spread-ing uncertainty, shrinking birth rates

Most studies document the pro-cyclicality of fertility to business cycles or labor market indicators. However, part of the recent fertility drop witnessed in Europe after the Great Recession is not explained by traditional measures. The present study advances that birth postponement might have accelerated in response to rising uncertainty, which fuelled negative expectations and declining confidence about the future. To provide empirical support for the causal effect of perceived uncertainty on births rate, we focus on the case of the sovereign debt crisis of 2011-2012 in Italy. Perceived uncertainty is measured using Google trends for the term "spread" – the thermometer of the crisis both in media and everyday conversations – to capture the degree of concern to the general public about the stability of Italian public finances. A regression discontinuity in time identifies the effect of perceived uncertainty on birth rates in Italy as a drop between 2.5% and 5%.