Does Economic Advancement ‘Cause’ a Re-increase in Fertility? An Empirical Analysis for OECD Countries (1960–2007)

In the light of the recent reversal of fertility trends in several highly developed countries, we investigate the impact of economic development and its components on fertility in OECD countries from 1960 to 2007. We find that the strong negative correlation between GDP per capita and fertility does no longer hold for high levels of per capita economic output; the relation instead seems to turn into positive from a certain threshold level of economic development on. Survival of an inverse J-shaped association between GDP per capita and fertility is found when controlling for birth postponement, omitted variable bias, non-stationarity and endogeneity. However, gaps between actual and predicted fertility rates show implicitly the importance of factors influencing fertility above and over per capita income. By decomposing GDP per capita into several components, we identify female employment as co-varying factor for the fertility rebound that can be observed in several highly developed countries. Pointing out to important differences with regard to the compatibility between childbearing and female employment, our results suggest that fertility increases are likely to be small if economic development is not accompanied by institutional changes that improve parents' opportunities to combine work and family life.