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

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.

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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.

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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.

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Correspondence to Ioannis A. Venetis.

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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.

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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

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

Keywords

  • Female labor supply
  • Fertility
  • Multi-horizon causality

JEL Classification

  • C32
  • J13
  • J21