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Skill premium effects on fertility and female labor force supply


In the last twenty years the United States has seen a positive relationship between female labor supply and total fertility rates, which differs from the pattern observed over the preceding years. We construct a general equilibrium overlapping generations model capable of generating this changing relationship between fertility and female labor supply. We argue that skilled biased technological change in recent decades has increased the skill premium and has therefore decreased the relative cost of (unskilled) child care services. The positive effect of the increase in female mean wages on fertility rates, and the inducement for labor force participation provided by the reduction in the relative cost of child care services, generated the positive relationship between fertility rates and female labor force participation in the last two decades.

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Correspondence to Dolores Ferrero Martínez.

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All correspondence to Amaia Iza. This paper has benefited particularly from comments by Juan Carlos Conesa, Pedro Mira and Sara de la Rica. We also acknowledge countless conversations with María Paz Espinosa and useful comments from Jaime Alonso, Jose María Da-Rocha, Tim Kehoe, José Victor Rios-Rull, when the paper was presented at the IV Workshop of Dynamic Macroeconomics held in Vigo (Spain, July 1999) and in Universidade de Vigo (October, 2000). We also thank an anonymous referee whose comments enabled us to improve the paper considerably. Financial support from Universidad del País Vasco 9UPV 00035.321-13511/2001, Ministerio de Educación y Ciencia PB097-0620, MCYT BEC2000/1394 and Instituto de la mujer (Ministerio de Trabajo y Asuntos Sociales) MTAS 33/00 is gratefully acknowledged. Any remaining errors are the authors’ responsibility. Responsible editor: Junsen Zhang.

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Martínez, D., Iza, A. Skill premium effects on fertility and female labor force supply. J Popul Econ 17, 1–16 (2004).

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JEL classification

  • J10
  • J12

Key words

  • Female labor supply
  • fertility rates
  • child care
  • skill premium