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Labor Market Frictions and Lowest Low Fertility

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  • Guner, Nezih

    () (CEMFI, Madrid)

  • Kaya, Ezgi

    () (Cardiff University)

  • Sánchez Marcos, Virginia

    () (Universidad de Cantabria)

Abstract

The total fertility rate is well below its replacement level of 2.1 children in high- income countries. Why do women choose such low fertility levels? We study how labor market frictions affect the fertility of college-educated women. We focus on two frictions: uncertainty created by dual labor markets (the coexistence of jobs with temporary and open-ended contracts) and inflexibility of work schedules. Using rich administrative data from the Spanish Social Security records, we show that women are less likely to be promoted to permanent jobs than men. Temporary contracts are also associated with a lower probability of first birth. With Time Use data, we also show that women with children are less likely to work in jobs with split-shift schedules, which come with a fixed time cost. We then build a life-cycle model in which married women decide whether to work or not, how many children to have, and when to have them. In the model, women face a trade-off between having children early and waiting and building their careers. We show that reforms that reduce the labor market duality and eliminate split-shift schedules increase the completed fertility of college-educated from 1.52 to 1.88. These reforms enable women to have more children and have them early in their life-cycle. They also increase the labor force participation of women and eliminate the employment gap between mothers and non-mothers.

Suggested Citation

  • Guner, Nezih & Kaya, Ezgi & Sánchez Marcos, Virginia, 2019. "Labor Market Frictions and Lowest Low Fertility," IZA Discussion Papers 12771, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp12771
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    1. Labor Market Frictions and Lowest Low Fertility
      by Christian Zimmermann in NEP-DGE blog on 2019-12-07 04:18:07

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    Cited by:

    1. David de la Croix & Aude Pommeret, 2017. "Childbearing Postponement, its Option Value, and the Biological Clock," LIDAM Discussion Papers IRES 2017016, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    2. Nezih Guner & Javier López-Segovia & Roberto Ramos, 2020. "Reforming the individual income tax in Spain," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 11(4), pages 369-406, December.
    3. Andrew E. Clark & Anthony Lepinteur, 2020. "A Natural Experiment on Job Insecurity and Fertility in France," PSE Working Papers halshs-02540036, HAL.
    4. Andrew E. Clark & Anthony Lepinteur, 2020. "A Natural Experiment on Job Insecurity and Fertility in France," Working Papers halshs-02540036, HAL.

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    More about this item

    Keywords

    fertility; labor market frictions; temporary contracts; split-shift schedules;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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