Changing Fertility Rates in Developed Countries. The Impact of Labor Market Institutions

Abstract

During the last two decades fertility rates have decreased and have become positively correlated with female participation rates across OECD countries. I use a panel of 23 OECD nations to study how different labor market arrangements shaped these trends. High unemployment and unstable contracts, common in Southern Europe, depress fertility, particularly of younger women. To increase lifetime income though early skill-acquisition and minimize unemployment risk, young women postpone (or abandon) childbearing. Further, both a large share of public employment, by providing employment stability, and generous maternity benefits linked to previous employment, such as those in Scandinavia, boost fertility of the 25-29 and 30-34 year old women.

Keywords: Fertility, OECD, unemployment, labor markets, labor participation

JEL Classification: J13, J2, J6