A Note on the Changing Relationship Between Fertility and Female Employment Rates in Developed Countries
In this paper we look at a panel of OECD aggregate fertility and labor market data between 1970 and 1995 and we report some striking recent developments. Total Fertility Rates (TFR) were falling and Female Participation Rates were increasing, conforming to a well known long-run trend. Along the cross-sectional dimension, the correlation between TFR and FPR was negative and significant during the 1970's and up to the early 1980's. This seemed consistent with secular comovements. However, by the late 1980's the correlation had become positive and equally significant. We discuss our findings within the framework of standard neoclassical models of fertility and labor supply adapted to macro data, as in Butz and Ward (1979). In order to explain the reversal of the correlation between fertility and participation rates, we consider simple extensions of their framework. First, we discuss the possibility that income effects of female wage increases are important. Next, we turn to three other factors: inflexible working hours faced by individual workers, the possibility of purchasing child care, and unemployment.
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- Ermisch, John F, 1988. "Purchased Child Care, Optimal Family Size and Mother's Employment," CEPR Discussion Papers 238, C.E.P.R. Discussion Papers.
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- Gary S. Becker, 1960. "An Economic Analysis of Fertility," NBER Chapters, in: Demographic and Economic Change in Developed Countries, pages 209-240 National Bureau of Economic Research, Inc.
- McDonald, John, 1983. "The emergence of countercyclical US fertility: A reassessment of the evidence," Journal of Macroeconomics, Elsevier, vol. 5(4), pages 421-436.
- Macunovich, D.J., 1996. "Relative Income and Price of Time: Exploring their effcts on U.S. Fertility and Female Labor Force Participation, 1963-1993," Department of Economics Working Papers 174, Department of Economics, Williams College.
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