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Fertility and Family Labor Supply

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  • Katrine Jakobsen
  • Thomas H Jørgensen
  • Hamish Low

Abstract

We study the importance of fertility adjustments for labor market responsiveness of men and women. First, we use longitudinal Danish register data and tax reforms from 2009 to provide new empirical evidence on fertility adjustments to tax changes. We find asymmetric effects between men and women: Increases in marginal net-of tax wages of women decrease fertility whereas increases in marginal net-of-tax wages of men increase fertility. Second, we quantify the importance of these fertility adjustments for understanding labor supply responses to tax reforms. To this end, we estimate a life-cycle model of family labor supply in which couples choose the timing and number of children, which also replicates the asymmetric fertility adjustments. In the model, allowing fertility adjustments increase the labor supply responsiveness of women by 28%, and, as a result, tax reforms can have larger and more persistent effects.

Suggested Citation

  • Katrine Jakobsen & Thomas H Jørgensen & Hamish Low, 2022. "Fertility and Family Labor Supply," Economics Series Working Papers 965, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:wpaper:965
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    More about this item

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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