Skip to main content
SpringerLink
Log in

The causal relationship between female labor supply and fertility in the USA: updated evidence via a time series multi-horizon approach

  • Original Paper
  • Published:
Journal of Population Economics Aims and scope Submit manuscript

Abstract

The purpose of this paper is to investigate the causality between female labor supply and fertility in the presence of auxiliary variables such as education, female wages, and male relative cohort size. We employ annual time series data spanning the period 1948 to 2007 for both an aggregate and an age-specific group. Our econometric specification follows closely the concepts and procedures proposed by Dufour and Renault (Econometrica 66(5):1099–1125, 1998) and Dufour et al. (J Econom 132:337–362, 2006) in that we conduct multi-horizon causality tests that allow for direct and indirect effects to take place. The sign and economic importance of our results is assessed via the estimation of impulse response functions. Our results establish bidirectional indirect causality between female labor supply and fertility and suggest interesting causal chains among the system variables. Causality effects are stronger for the age-specific group.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4

Similar content being viewed by others

Notes

  1. The system has m equations in total and β i (h) is the i th column of \(\mathit{\hat{\Pi}}^{(h)}\).

  2. A detailed calculation procedure is given in Dufour et al. (2006) (pp. 344–346).

  3. The Dufour et al. (2006) tests were computed using Ox version 5.10, see Doornik (2007). All routines along with the data are available upon request.

  4. Notice that causal neutralization can only occur when Z is multivariate.

  5. See also Michael (1985).

  6. Engelhardt and Prskawetz (2004) use female first marriage rate, the divorce rate, and the mean age at first birth. The relationship between a woman’s age at first birth and total fertility is also discussed in Kohler et al. (2002) and Bratti and Tatsiramos (2012).

  7. All results in Tables 1, 2, 3, 4, and 5 were produced using EViews 7.1.

  8. McNown (2003), McNown and Ridao-Cano (2005), and Jeon and Shields (2008) have reached a similar conclusion with respect to the integration order of relative cohort size.

  9. The test results were not affected qualitatively by model choice. Models A and B set β = 0, γ = 0, and θ = 0, respectively.

  10. Dufour and Taamouti (2010) provide short run and long run causality measures for multivariate models; however, their approach accommodates only stationary VAR processes.

References

  • Becker GS (1960) An economic analysis of fertility. In: Demographic and economic change in developed countries. Universities-N.B.E.R. conference series No. 11. Princeton University Press, Princeton

  • Becker GS (1981) A treatise on the family. Harvard University Press, Cambridge

    Google Scholar 

  • Bratti M, Tatsiramos K (2012) The effect of delaying motherhood on the second childbirth in Europe. J Popul Econ 25:291–321

    Article  Google Scholar 

  • Butz WP, Ward MP (1979) The emergence of countercyclical fertility. Am Econ Rev 69(3): 318–328

    Google Scholar 

  • Cheng BS (1996a) An investigation of cointegration and causality between fertility and female labor force participation. Appl Econ Lett 3(1):29–32

    Article  Google Scholar 

  • Cheng BS (1996b) The causal relationship between African American fertility and female labor supply: policy implications. Rev Black Polit Econ 25:77–88

    Article  Google Scholar 

  • Cheng BS, Hsu RC, Chu Q (1997) The causality between fertility and female labor force participation in Japan. Appl Econ Lett 4(2):113–116

    Article  Google Scholar 

  • Dickey DA, Fuller W (1979) Distribution of the estimators for autoregressive time series with a unit root. J Am Stat Assoc 74(366):427–431

    Article  Google Scholar 

  • Dolado JJ, Lütkepohl H (1996) Making Wald tests work for cointegrated VAR systems. Econom Rev 15(4):369–386

    Article  Google Scholar 

  • Doornik JA (2007) Object-oriented matrix programming using Ox, 3rd edn. Timberlake Consultants Press, London. www.doornik.com

    Google Scholar 

  • Dufour JM, Renault E (1998) Short-run and long-run causality in time series: theory. Econometrica 66(5):1099–1125

    Article  Google Scholar 

  • Dufour JM, Pelletier D, Renault E (2006) Short run and long run causality in time series: inference. J Econom 132:337–362

    Article  Google Scholar 

  • Dufour JM, Taamouti A (2010) Short and long run causality measures: theory and inference. J Econom 154:42–58

    Article  Google Scholar 

  • Easterlin RA (1973) Relative economic status and the american fertility swing. In: Sheldon EB (ed) Family economic behavior: problems and prospects. Lippincott, Philadelphia, pp 170–223

  • EasterlinRothenberg TJ, Stock JH RA (1980) American population since 1940. In: Feldstein M (ed) The American economy in transition. University of Chicago Press, Chicago, pp 275–321

    Google Scholar 

  • Elliott G, Rothenberg TJ, Stock JH (1996) Efficient tests for an autoregressive unit root. Econometrica 64:813–836

    Article  Google Scholar 

  • Engelhardt H, Kögel T, Prskawetz A (2004) Fertility and women’s employment reconsidered: a macro-level time-series analysis for developed countries, 1960–2000. Popul Stud 58(1):109–120

    Article  Google Scholar 

  • Engelhardt H, Prskawetz A (2004) On the changing correlation between fertility and female employment over space and time. Eur J Popul 20:35–62

    Article  Google Scholar 

  • Ermisch J (1979) The relevance of the ‘Easterlin hypothesis’ and the ‘new home economics’ to fertility movements in Great Britain. Popul Stud 33:39–58

    Google Scholar 

  • Ermisch J (1980) Time costs, aspirations and the effect of economic growth on german fertility. Oxf Bull Econ Stat 42:125–143

    Article  Google Scholar 

  • Giles JA (2002) Testing for two-step Granger non-causality in trivariate VAR models. In: Ullah A, Wan AK, Chaturvedi A (eds) Handbook of applied econometrics and statistical inference. Marcel Dekker, New York, pp 371–399 (Chapter 18)

  • Granger CWJ (1969). Investigating causal relations by econometric models and cross-spectral methods. Econometrica 37(3):424–438

    Article  Google Scholar 

  • Hill JB (2005) Causation delays and causal neutralization up to three steps ahead: the money-output relationship revisited. Department of Economics, Florida International University. Available: http://econpapers.repec.org/paper/wpawuwpem/0503016.htm

  • Hill JB (2007) Efficient tests of long-run causation in trivariate var processes with a rolling window study of the money–income relationship. J Appl Econom 22:747–765

    Article  Google Scholar 

  • Hotz VJ, Klerman JA, Willis RJ (1997) The economics of fertility in developed countries. In: Rosenzweig MR, Stark O (eds) Hanbook of population and family economics. Elsevier, Amsterdam, pp 275–347

    Chapter  Google Scholar 

  • Jeon Y, Shields MP (2008) The impact of relative cohort size on U.S. fertility 1913–2001. IZA discussion paper no. 3587

  • Johansen S (1991) Estimation and hypothesis testing of cointegrating vectors in Gaussian vector autoregressive models. Econometrica, 59:1551–1580

    Article  Google Scholar 

  • Johansen S (1995) Likelihood based inference in cointegrated vector autoregressive models. Oxford University Press, Oxford

    Book  Google Scholar 

  • Kilian L, Ohanian LE (1998) Is there a trend break in U.S. GNP? A macroeconomic perspective. Fed Reserve Bank Minneap Staff Rep 244

  • Kilian L, Ohanian LE (2002) Unit roots, trend breaks, and transitory dynamics: a macroeconomic perspective. Macroecon Dyn 6:614-632

    Article  Google Scholar 

  • Klijzing E, Sieger J, Keilman N, Groot L (1988) Static versus dynamic analysis of the interaction between female labour force participation and fertility. Eur J Popul 4:97–116

    Article  Google Scholar 

  • Kohler HP, Billari FC, Ortega JA (2002) The emergence of lowest–low fertility in Europe during the 1990’s. Popul Dev Rev 28(4):641–680

    Article  Google Scholar 

  • Korenman S, Neumark D (2000) Cohort crowding and youth labor markets (a cross-national analysis). In: Blanchflower DG, Freeman RB (eds)Youth employment and joblessness in advanced countries. University of Chicago Press, Chicago, pp 57–106

    Google Scholar 

  • Kwiatkowski D, Phillips PCB, Schmidt P, Yongcheol S (1992) Testing the null hypothesis of stationarity against the alternative of a unit root. J Econom 54:159–178

    Article  Google Scholar 

  • Lehrer E, Nerlove M (1986) Female labor force behaviour and fertility in the United States. Annu Rev Sociol 12:181–204

    Article  Google Scholar 

  • Lütkepohl H (1993) Testing for causation between two variables in higher dimensional VAR models. In: Schneeweiss H, Zimmermann K (eds) Studies in applied econometrics. Springer, Heidelberg

    Google Scholar 

  • Macunovich DJ (1996a) Relative income and price of time: exploring their effects on fertility and female labor force participation. Popul Dev Rev (Supplement) 22:223–257

    Article  Google Scholar 

  • Macunovich DJ (1996b) A review of recent developments in the economics of fertility. In: Menchik P (ed) Household and family economics. Kluwer Academic, Boston, pp 91–150

  • Macunovich DJ (1998) Fertility and the Easterlin hypothesis: an assessment of the literature. J Popul Econ 11:53–111

    Article  Google Scholar 

  • Macunovich DJ (1999) The fortunes of one’s birth: relative cohort size and the youth labor market in the United States. J Popul Econ 12:215–272

    Article  Google Scholar 

  • McNown R (2003) A cointegration model of age-specific fertility and female labor supply in the United States. South Econ J 70(2):344–358

    Article  Google Scholar 

  • McNown R, Rajbhandary S (2003) Time series analysis of fertility and female labor market behavior. J Popul Econ 16:501–523

    Article  Google Scholar 

  • McNown R, Ridao-Cano C (2005) A time series model of fertility and female labour supply in the UK. Appl Econ 37(5):521–532

    Article  Google Scholar 

  • Michael RT (1985) Consequences of the rise in female labor force participation rates: questions and probes. J Labor Econ 3(1) Part 2: Trends in Women’s Work, Education, and Family Building:S117–S146

  • Mishra V, Smyth R (2010) Female labor force participation and total fertility rates in the OECD: new evidence from panel cointegration and Granger causality testing. J Econ Bus 62:48–64

    Article  Google Scholar 

  • Mishra V, Nielsen I, Smyth R (2010) On the relationship between female labour force participation and fertility in G7 countries: evidence from panel cointegration and Granger causality. Empir Econ 38:361–372

    Article  Google Scholar 

  • Montgomery M, Trussell J (1986) Models of marital status and childbearing. In: Ashenfelter O, Layard R (eds) Handbook of labor economics, volume I. Elsevier Science, Amsterdam

    Google Scholar 

  • Ng S, Perron P (2001) Lag length selection and the construction of unit root tests with good size and power. Econometrica 69(6):1519–1554

    Article  Google Scholar 

  • Phillips PCB, Perron P (1988) Testing for unit roots in time series regression. Biometrika 75: 423–470

    Article  Google Scholar 

  • Toda HY, Yamamoto T (1995) Statistical inference in vector autoregressions with possibly integrated processes. J Econom 66:225–250

    Google Scholar 

  • Waldorf B, Byun P (2005) Meta-analysis of the impact of age structure on fertility. J Popul Econ 18:15–40

    Article  Google Scholar 

  • Willis RJ (1973) A new approach to the economic theory of fertility behavior. J Polit Econ 81: S14–S64

    Article  Google Scholar 

  • Zimmermann KF (1985) Familienökonomie. Springer, Berlin

    Book  Google Scholar 

  • Zivot E, Andrews DWK (1992) Further evidence on the great crash, the oil price shock, and the unit root hypothesis. J Bus Econ Stat 10(3):251–270

    Google Scholar 

Download references

Acknowledgements

The authors gratefully acknowledge the detailed and constructive comments of two anonymous referees that led to substantial improvements. All remaining errors, if any, are of course ours.

Author information

Authors and Affiliations

  1. Department of Economics, University of Patras, University Campus, Rio, 26504, Greece

    Paraskevi K. Salamaliki, Ioannis A. Venetis & Nicholas Giannakopoulos

Authors
  1. Paraskevi K. Salamaliki
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Ioannis A. Venetis
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Nicholas Giannakopoulos
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Ioannis A. Venetis.

Additional information

Responsible editor: Junsen Zhang

Appendix: Data sources and construction of variables

Appendix: Data sources and construction of variables

Labor force participation rate of women aged 16 years and over.

Annual data, 1948–2007, Bureau of Labor Statistics, Current Population Survey (CPS), http://www.bls.gov/cps/cpsatabs.htm

Labor force participation rate of women aged 25–34 years old.

Annual data, 1948–2007, Bureau of Labor Statistics, Current Population Survey (CPS), http://www.bls.gov/data/

Fertility: total fertility rate.

Annual data, 1948–2007. Vital Statistics of the United States, http://www.cdc.gov/nchs/products/vsus.htm, file natfinal2003.annvol1_07.pdf for the years 1948 to 2003 and U.S Census Bureau, 2010 statistical abstract for years 2004 to 2007, http://www.census.gov/compendia/statab/cats/births_deaths_marriages_divorces/births.html , table 10s0083.xls

Median age of women at first marriage.

Annual data, 1948–2007, US Census Bureau, Current Population Survey (CPS), http://www.census.gov/population/www/socdemo/hh-fam.html

Resident Population, women 25–34 years old, men 25–34 years old, men 35–55 years old.

Annual data, 1948–2007, US Census Bureau, Current Population Survey (CPS), http://www.census.gov/population/www/socdemo/educ-attn.html

Resident Population, males 20–29, males 35–64, US Census Bureau, International Data Base, http://www.census.gov/ipc/www/idb/

Median income, males and females, age 15 and over (2008 dollars).

Annual data, 1948–2007, 2010 Statistical Abstract, US Census Bureau, table p08AR.xls, http://www.census.gov/hhes/www/income/histinc/incpertoc.html

Median income, females 25–34 years old (2008 dollars), http://www.census.gov/hhes/www/income/histinc/incpertoc.html

Years of school completed.

Annual data, 1948–2007, US Census Bureau, Current Population Survey (CPS), http://www.census.gov/population/www/socdemo/educ-attn.html

Women ages 25–34 who have completed at least 1 year of college.

Education, edt, is the percentage of women ages 25–34 who have completed at least 1 year in college

$${\rm ed}_{\rm t}=c2534_{\rm t}/{\rm fm}2534_{\rm t} $$

where c2534t = females, 25–34 years, who have completed one or more years of college, fm2534t = females, 25–34 years (resident population). Data for the years 1948–49, 1951, 1953–56, 1958, 1961, and 1963 were calculated by linear interpolation.

Wage rate of women, 15 years and over.

$${\rm wrf}_{\rm t}={\rm Ifem}_{\rm t}/1750 $$

where Ifem = median income of women, 15 years and over, (2008 dollars), which is divided by 1,750 h of full time work per year. This yields estimates of an hourly wage figure.

Wage rate of women, 25–34 years old.

$${\rm wrf2534}_{\rm t}={\rm Ifem2534}_{\rm t}/1\text{,}750 $$

where Ifem2534t = median income of women, 25–34 years old (2008 dollars)

Relative cohort size.

Relative cohort size is computed by dividing resident population of men aged 20–29 with resident population of men aged 35–64.

$${\rm cs}_{\rm t}={\rm males2029}_{\rm t}/{\rm males3564}_{\rm t} $$

where males2029t = resident population of men aged 20–29 years old, males3564t = resident population of men aged 35–64 years old.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Salamaliki, P.K., Venetis, I.A. & Giannakopoulos, N. The causal relationship between female labor supply and fertility in the USA: updated evidence via a time series multi-horizon approach. J Popul Econ 26, 109–145 (2013). https://doi.org/10.1007/s00148-012-0418-8

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s00148-012-0418-8

Keywords

JEL Classification

Search

Navigation