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Fertility and the business cycle: the European case

Héctor Bellido () and Miriam Marcén

Review of Economics of the Household, 2019, vol. 17, issue 4, No 8, 1289-1319

Abstract: Abstract This paper analyzes the role of the business cycle in fertility, using data from 30 European countries for the period 1993 to 2013. We find that the unemployment rate, used as a proxy for the evolution of the business cycle, negatively affects the fertility rate, although the effect of business cycle variations is quite moderate. Since, with the available data for the period, it is not possible to check whether recent changes in the business cycle have had a permanent effect on the fertility behavior of women, our findings address only short-term results. These are maintained when we control for the welfare generosity of the European countries, in addition to country-level socio-economic and institutional factors, along with unobservable characteristics that can vary by country and/or over time. Only under two scenarios, very flexible labor markets and high levels of gender equality, is it possible to predict a potential counter-cyclical response of fertility. Supplementary analysis, developed to explore the impact of the business cycle on the entire distribution of the fertility rate, indicates that the effect of unemployment is strong in the bottom quantiles, corresponding to low fertility rates, indicating that economic uncertainty discourages fertility decisions even more strongly in those societies where having a child is costly.

Keywords: Fertility; Unemployment; Business cycle; C14; C23; J13; J64 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s11150-019-09449-y

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