Advertisement

Journal of Family and Economic Issues

, Volume 31, Issue 1, pp 33–50 | Cite as

Fertility Determinants and Economic Uncertainty: An Assessment Using European Panel Data

  • George Hondroyiannis
Original Paper

Abstract

This study examined the determinants of fertility, using panel data for 27 European countries. We employed panel co-integration to estimate fertility as function of demographic and economic variables. We showed that low fertility in most industrialized countries in Europe is due to low infant mortality rates, high female employment, low nuptiality rate, and high opportunity cost of having children. Using two measures of economic uncertainty, which are associated with labor market decisions—a production (an output) volatility measure and the unemployment rate—we examined to what extent economic insecurities affect fertility decisions. The empirical results showed that both measures of economic uncertainty have a significant negative impact on fertility implying that labor market insecurities might be a significant factor affecting fertility decisions.

Keywords

Fertility choice Panel estimation 

Notes

Acknowledgment

I wish to acknowledge useful discussions and suggestions with Stephen Hall and helpful comments from three anonymous referees and the editor of the journal.

References

  1. Attanasio, O. P., Picci, L., & Scorcu, A. (2000). Saving growth and investment: A macroeconomic analysis using panel of countries. Review of Economics and Statistics, 82(2), 182–211.CrossRefGoogle Scholar
  2. Bailey, R. E., & Chambers, M. J. (1998). The impact of real wage and mortality fluctuations on fertility and nuptiality in precensus England. Journal of Population Economics, 11(3), 413–434.CrossRefGoogle Scholar
  3. Barro, R. J., & Becker, G. S. (1989). Fertility choice in a model of economic growth. Econometrica, 57(2), 481–501.CrossRefGoogle Scholar
  4. Becker, G. S. (1960). An economic analysis of fertility. In Demographic and Economic Change in Developed Countries: A Conference of the Universities (NBER Committee of Economic Research). Princeton, NJ: Princeton University Press.Google Scholar
  5. Becker, G. S. (1965). A theory of the allocation of time. Economic Journal, 71, 493–517.CrossRefGoogle Scholar
  6. Becker, G. S. (1973). A theory of marriage: Part I. Journal of Political Economy, 81(4), 813–846.CrossRefGoogle Scholar
  7. Becker, G. S. (1981). A treatise on the family. Cambridge, MA: Harvard University Press.Google Scholar
  8. Becker, G. S. (1988). Family economics and macro behavior. American Economic Review, 78(1), 1–13.Google Scholar
  9. Becker, G. S. (1992). Fertility and the economy. Journal of Population Economics, 5(3), 185–201.CrossRefGoogle Scholar
  10. Becker, G. S., & Barro, R. J. (1988). A reformulation of the economic theory of fertility. Quarterly Journal of Economics, 103(1), 1–25.CrossRefGoogle Scholar
  11. Becker, G. S., Glaeser, E. L., & Murphy, K. M. (1999). Population and economic growth. American Economic Review Papers and Proceedings, 89(2), 145–149.Google Scholar
  12. Becker, G. S., & Lewis, G. H. (1973). On the interaction between the quantity and quality of children. Journal of Political Economy, 81(2 Part II), S279–S288.CrossRefGoogle Scholar
  13. Becker, G. S., Murphy, K. M., & Tamura, R. (1990). Human capital fertility and economic growth. Journal of Political Economy, 98(5), S12–S37.CrossRefGoogle Scholar
  14. Boucekkine, R., de la Croix, D., & Licandro, O. (2002). Vintage human capital, demographic trends, and endogenous growth. Journal of Economic Theory, 104, 340–375.CrossRefGoogle Scholar
  15. Brander, J. A., & Dowrick, S. (1994). The role of fertility economic growth: Empirical results from aggregate cross-national data. Journal of Population Economics, 7(1), 1–25.CrossRefGoogle Scholar
  16. Breitung, J. (2000). The local power of some unit root tests for panel data. In B. Baltagi (Ed.), Advances in econometrics, 15: Nonstationary panels, panel cointegration and dynamic panels (pp. 161–178). Amsterdam: JAI Press.CrossRefGoogle Scholar
  17. Cain, G., & Dooley, M. D. (1976). Estimation of a model of labor supply, fertility and wages of married women. Journal of Political Economy, 84, S179–S201.CrossRefGoogle Scholar
  18. Campione, W. (2008). Employed women’s well-being: The global and daily impact of work. Journal of Family and Economic Issues, 29, 346–361.CrossRefGoogle Scholar
  19. Carliner, G., Robinson, C., & Tomes, N. (1980). Female labour supply and fertility in Canada. Canadian Journal of Economics, 13, 46–64.CrossRefGoogle Scholar
  20. Choi, I. (2001). Unit root tests for panel data. Journal of International Money and Finance, 20, 249–272.CrossRefGoogle Scholar
  21. Cigno, A. (1991). Economics of the family. Oxford, UK: Clarendon Press.Google Scholar
  22. Cigno, A. (1998). Fertility decisions when infant survival is endogenous. Journal of Population Economics, 11(1), 21–28.CrossRefGoogle Scholar
  23. Colombino, U. (2000). The cost of children when children are a choice. Labour, 14, 79–96.CrossRefGoogle Scholar
  24. Craig, L. (2007). How employed mothers in Australia find time for both market work and childcare. Journal of Family and Economic Issues, 28, 69–87.CrossRefGoogle Scholar
  25. D’ Addio, A. C., & Mira d’Ecole, M. (2005). Policies, institutions and fertility rates: A panel data analysis for OECD Countries. OECD Economic Studies, 41, 8–45.Google Scholar
  26. Dickey, D. A., & Fuller, W. A. (1979). Distributions of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association, 74(366), 427–431.CrossRefGoogle Scholar
  27. Dickey, D. A., & Fuller, W. A. (1981). The likelihood ratio statistics for autoregressive time series with a unit root. Econometrica, 49(4), 1057–1072.CrossRefGoogle Scholar
  28. Ehrlich, I. (1990). Introduction. Journal of Political Economy, 98(4), S1–S11.CrossRefGoogle Scholar
  29. Ehrlich, I., & Lui, F. T. (1991). Intergenerational trade, longevity, and economic growth. Journal of Political Economy, 99(5), 1029–1059.CrossRefGoogle Scholar
  30. Fleisher, B. M., & Rhodes, G. F, Jr. (1976). Unemployment and the labor force participation of married men and women: A simultaneous model. Review of Economics and Statistics, 58, 398–406.CrossRefGoogle Scholar
  31. French, M. W., & Sichel, D. (1993). Cyclical patterns in the variance of economic activity. Journal of Business and Economic Statistics, 11, 113–119.CrossRefGoogle Scholar
  32. Guest, R., & McDonald, I. M. (2001). Ageing, optimal national saving and future living standards in Australia. The Economic Record, 77, 117–134.CrossRefGoogle Scholar
  33. Hadri, K. (2000). Testing for stationarity in heterogeneous panel data. Econometric Journal, 3, 148–161.CrossRefGoogle Scholar
  34. Haque, N. U., Pesaran, M. H., & Sarma, S. (1999). Neglected heterogeneity and dynamics in cross-country saving regressions. UK: Mimeo, University of Cambridge.Google Scholar
  35. Herbst, C. M., & Barnow, B. S. (2008). Close to home: A simultaneous equation model of the relationship between child care accessibility and female labor force participation. Journal of Family and Economic Issues, 29, 128–151.CrossRefGoogle Scholar
  36. Hnatkovska, V. & Loayza, N. (2004). Volatility and growth. World Bank Working Papers, WPS3184.Google Scholar
  37. Hondroyiannis, G. (2004). Modeling household fertility decisions in Greece. The Social Science Journal, 41, 477–483.CrossRefGoogle Scholar
  38. Hondroyiannis, G. (2006). Private savings determinants in European countries: A panel cointegration approach. The Social Science Journal, 43, 553–569.CrossRefGoogle Scholar
  39. Hondroyiannis, G., & Papapetrou, E. (2002a). Demographic transition and economic growth: Empirical evidence from Greece. Journal of Population Economics, 15(2), 221–242.CrossRefGoogle Scholar
  40. Hondroyiannis, G., & Papapetrou, E. (2002b). Demographic transition in Europe. Economics Bulletin, 10(3), 1–8.Google Scholar
  41. Hondroyiannis, G., & Papapetrou, E. (2004). Demographic changes and economic activity in Greece. Review of Economics of the Household, 2, 49–71.CrossRefGoogle Scholar
  42. Hondroyiannis, G., & Papapetrou, E. (2005). Fertility and output in Europe: New evidence from panel cointegration analysis. Journal of Policy Modeling, 27, 143–156.CrossRefGoogle Scholar
  43. Hotz, V. J., & Miller, R. A. (1988). An empirical analysis of life cycle fertility and female labor supply. Econometrica, 56, 91–118.CrossRefGoogle Scholar
  44. Huang, T, Jr. (2003). Unemployment and family behavior in Taiwan. Journal of Family and Economic Issues, 24, 27–48.CrossRefGoogle Scholar
  45. Huang, T, Jr. (2007). Labor force participation and juvenile delinquency in Taiwan: A time series analysis. Journal of Family and Economic Issues, 28, 137–150.CrossRefGoogle Scholar
  46. Huang, T, Jr., Kao, A. P., & Hung, W. C. (2006). The influence of college tuition and fees on fertility rate in Taiwan. Journal of Family and Economic Issues, 27, 626–642.CrossRefGoogle Scholar
  47. Im, K. S. M., Pesaran, H., & Shin, Y. (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115, 53–74.CrossRefGoogle Scholar
  48. Kalwij, A. S. (2000). The effects of female employment status on the presence and number of children. Journal of Population Economics, 13, 221–239.CrossRefGoogle Scholar
  49. Kao, C. (1999). Spurious regression and residual based tests for cointegration in panel data. Journal of Econometrics, 90, 1–44.CrossRefGoogle Scholar
  50. Kao, C. & Chiang, M. H. (1999). On the estimation and inference of a cointegrated regression in panel data. Working paper. Syracuse University Economics Department, Syracuse, NY.Google Scholar
  51. Karimi, L., & Nouri, A. (2009). Do work demands and resources predict work family conflict and facilitation? A study of Iran male employees. Journal of Family and Economic Issues, 30, 193–202.CrossRefGoogle Scholar
  52. Klasen, S., & Launov, A. (2006). Analysis of the determinants of fertility decline in the Czech Republic. Journal of Population Economics, 19, 25–54.CrossRefGoogle Scholar
  53. Kose, A. M., Prasad, E. S., & Terrones, M. E. (2005). Growth and volatility in an era of globalization. IMF Staff Papers, 52, 31–63.Google Scholar
  54. Kwiatkowski, D., Phillips, P. C. B., Schmidt, P., & Shin, Y. (1992). Testing the null hypothesis of stationarity against the alternative of a unit root. Journal of Econometrics, 54(1–3), 159–178.CrossRefGoogle Scholar
  55. Lee, R. (2003). The demographic transition: Three centuries of fundamental change. Journal of Economic Perspectives, 17, 167–190.CrossRefGoogle Scholar
  56. Levin, A., Lin, C. F., & Chu, C. S. J. (2002). Unit root tests in panel data: Asymptotic and finite-sample properties. Journal of Econometrics, 108, 1–24.CrossRefGoogle Scholar
  57. Madala, G. S., & Wu, S. (1999). A comparative study of unit root tests with panel data and a new simple test. Oxford Bulletin of Economics and Statistics, 61, 631–652.CrossRefGoogle Scholar
  58. Mahdavi, S. (1990). A simultaneous-equations model of cross-national differentials in fertility labor force participation rates. Journal of Economic Studies, 17, 32–49.CrossRefGoogle Scholar
  59. Mammen, S., Lass, D., & Seiling, S. B. (2009). Labor force supply decisions of rural low-income mothers. Journal of Family and Economic Issues, 30, 67–79.CrossRefGoogle Scholar
  60. Melkersson, M., & Rooth, D. O. (2000). Modeling female fertility using inflated count data. Journal of Population Economics, 13, 189–203.CrossRefGoogle Scholar
  61. Mocan, N. I. (1990). Business cycles and fertility dynamics in the United States: A vector auto regressive model. Journal of Population Economics, 3, 125–146.CrossRefGoogle Scholar
  62. Modigliani, F. (1966). The life cycle hypothesis of saving, the demand for wealth and the supply of Capital. Social Research, 33, 160–217.Google Scholar
  63. Modigliani, F. (1970). The life-cycle hypothesis of saving and inter-country differences in the saving ratio. In W. Eltis, M. Scott, & J. Wolfe (Eds.), Induction, growth and trade: Essays in Honor of Sir Roy Harrod. Oxford: Clarendon.Google Scholar
  64. Moffit, R. (1984). Profiles of fertility, labour supply and wages of married women: A complete life-cycle model. Review of Economic Studies, 51, 263–278.CrossRefGoogle Scholar
  65. Molina, J. A., & Montuenga, V. M. (2009). The motherhood wage penalty in Spain. Journal of Family and Economic Issues, 30, 237–251.CrossRefGoogle Scholar
  66. Murasko, J. E. (2008). Married women’s labor supply and spousal health insurance coverage in the United States: Results from panel data. Journal of Family and Economic Issues, 29, 391–406.CrossRefGoogle Scholar
  67. Nelson, D. B. (1991). Conditional heteroskedasticity in asset returns: A new approach. Econometrica, 59, 347–370.CrossRefGoogle Scholar
  68. Nguyen-Dinh, H. (1997). A socioeconomic analysis of the determinants of fertility: The case of Vietnam. Journal of Population Economics, 10, 251–271.CrossRefGoogle Scholar
  69. Pagani, L., & Marenzi, A. (2008). The labor market participation of sandwich generation Italian women. Journal of Family and Economic Issues, 29, 427–444.CrossRefGoogle Scholar
  70. Pampel, F. C. (1993). Relative cohort size and fertility: The socio-political context of the Easterlin effect. American Sociological Review, 58, 496–514.CrossRefGoogle Scholar
  71. Papapetrou, E. (2004). Does female employment affect fertility? Evidence from the United Kingdom. The Social Science Journal, 41, 235–249.CrossRefGoogle Scholar
  72. Pedroni, P. (1999). Critical values for cointegration tests in heterogeneous panels with multiple regressors. Oxford Bulletin of Economics and Statistics, 61, 653–670.CrossRefGoogle Scholar
  73. Pedroni, P. (2004). Panel cointegration: Asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Econometric Theory, 20, 597–625.CrossRefGoogle Scholar
  74. Perron, P. (1988). Trends and random walks in macroeconomic time: Series further evidence from a new approach. Journal of Economic Dynamics and Control, 12(2–3), 297–332.CrossRefGoogle Scholar
  75. Pesaran, M. H., & Smith, R. (1995). Estimating long-run relationships from dynamic heterogeneous panels. Journal of Econometrics, 68, 79–113.CrossRefGoogle Scholar
  76. Phillips, P. C. B. (1987). Time series regression with a unit root. Econometrica, 55(2), 277–346.CrossRefGoogle Scholar
  77. Phillips, P. C. B., & Perron, P. (1988). Testing for a unit root in time series regression. Biometrica, 75(2), 335–346.CrossRefGoogle Scholar
  78. Pommeret, A., & Smith, W. T. (2005). Fertility, volatility and growth. Economics Letters, 87, 347–353.CrossRefGoogle Scholar
  79. Poot, J., & Siegers, J. J. (2001). The macroeconomics of fertility in small open economies: A test of the Becker-Barro model for The Netherlands and New Zealand. Journal of Population Economics, 14(1), 73–100.CrossRefGoogle Scholar
  80. Rostow, W. W. (1990). Theorists of economic growth from David Hume to the present. New York: Oxford University Press.Google Scholar
  81. Sah, R. K. (1991). The effect of child mortality changes on fertility choice and parental welfare. Journal of Political Economy, 99(3), 582–606.CrossRefGoogle Scholar
  82. Sarantis, N., & Stewart, C. (2001). Saving behaviour in OECD countries: Evidence from panel cointegration tests. The Manchester School Supplement, 69, 22–41.CrossRefGoogle Scholar
  83. Simon, J. L. (1989). On aggregate empirical studies relating population variables to economic development. Population and Development Review, 15, 323–332.CrossRefGoogle Scholar
  84. Stanfors, M. A. (2006). Labor force transitions after childbirth among five birth cohorts in Sweden. Journal of Family and Economic Issues, 27(2), 287–309.CrossRefGoogle Scholar
  85. Wang, W., & Famoye, F. (1997). Modeling household fertility decisions with generalized poisson regression. Journal of Population Economics, 10, 273–283.CrossRefGoogle Scholar
  86. Wang, P., Yip, C. K., & Scotese, C. A. (1994). Fertility choice and economic growth theory and evidence. The Review of Economics and Statistics, 46(2), 255–266.CrossRefGoogle Scholar
  87. Weagley, R. O., Chan, M.-L., & Yan, J. (2007). Married couples’ time allocation decisions and marital stability. Journal of Family and Economic Issues, 28, 507–525.CrossRefGoogle Scholar
  88. Whittington, L. A., Alm, J., & Peters, E. H. (1990). Fertility and the personal exemption: Implicit pronatalist policy in the United States. American Economic Review, 80, 545–556.Google Scholar
  89. Willis, R. J. (1973). A new approach to the economic theory of fertility behavior. Journal of Political Economy, 81, S14–S64.CrossRefGoogle Scholar
  90. Winegarden, C. R., & Wheeler, M. (1992). The role of economic growth in the fertility transition in Western Europe: Econometric evidence. Economica, 59(236), 421–435.CrossRefGoogle Scholar
  91. Yilmazer, T. (2008). Saving for children’s college education: An empirical analysis of the trade-off between the quality and quantity of children. Journal of Family and Economic Issues, 29, 307–324.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.Bank of Greece, Economic Research DepartmentHarokopio UniversityAthensGreece

Personalised recommendations