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Baby commodity booms? The impact of commodity shocks on fertility decisions and outcomes

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Abstract

This paper uses international commodity prices and local natural resource endowments as a source of plausibly exogenous variation in local Chilean economic conditions to study how these shocks impact fertility behavior of families in a small, emerging open economy where non-marital fertility is common but parental obligations are not well enforced. We find that these commodity shocks lead to an increase in the number of births and the birth rate. We argue that these results are consistent with most women experiencing an income effect and a limited substitution effect from commodity booms. This is confirmed by looking at groups that would have experienced a larger income than substitution effect: higher-order births, births within marital relationships, and those by mothers who do not experience an increase in their employment probability respond more strongly to these commodity booms.

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Notes

  1. While teenage pregnancies are a relevant problem with around 15% of births coming from that age group during our analysis, youth marriages are prohibited, with the minimum age of marriage being 16 for both genders with parental consent and 18 without.

  2. Our strategy thus assumes that individuals who wish to conceive can do so within 3 months. This is a strong assumption since it can take up to a year to a fertile couple to conceive when they wish to do so. The speed at which one can conceive also critically depends on the method of contraception previously used. In 2017 (the only year for which we were able to find comprehensive information regarding the use of contraceptives in the adult population), only 54% of the surveyed adults declared using contraception and the most used method was condoms at 26%, followed by oral contraceptives at 16%. This pattern is likely to have been even stronger during most of the period of our study. This would imply that couples who wish to conceive would be able to abandon their method of contraception (or absence of it) easily leading to relatively quick impact on conceptions. Other studies have found short-term effects on births. Rodgers et al. (2005) find a short-term and local impact of the Oklahoma City bombing, Nandi et al. (2018) of the 2001 Gujarat earthquake. In poorer countries with worse access to modern contraception, the short-term effects are particularly visible. Alam and P ortner (2018) find that women have a lower probability of being pregnant within 7 months of a crop loss and lower fertility within 7 to 14 months. Davis (2017) also finds short-term impacts (within 2 years) of Hurricane Mitch. In the context of Chile, Hinojosa (2018) finds an immediate and short-lasting increase in births in the four months following the large earthquake of 2010. Similarly, Rau et al. (2017) find that a large increase in the prices of oral contraceptives led to very immediate increase in births. Nevertheless, we recognize that our impact may be underestimated if some couples need a few quarters to respond.

  3. However, we also show indication that it seems to be the “permanent” component of the shock that elicits fertility responses.

  4. There is non-trivial weekly migration between the central zone of the country and some of the resources-rich areas. This will be captured in our employment share measure since this is obtained from the Census of population which records the location of an individual the night before the day of the Census.

  5. This does not imply that these changes did not occur. Changes in industrial composition at the county level will simply weaken the first stage relationship between our instrument and the endogenous variable.

  6. The second largest producer of copper is Peru which produces less than 15% of the world’s production. China is next with around 10%, then the Democratic Republic of Congo and the USA, each with 8% of the world’s production. Australia, Russia, Zambia, Mexico, Kazakhstan, Canada, and Poland all capture between 3 and 5%. Thus, the copper market includes a few large players and a number of smaller marginal producers which reduces the capacity of Chile to manipulate the price.

  7. Chile now is the OCDE country with the most out-of-wedlock births at 71.1% in 2014.

  8. Father’s educational attainment categories do not sum to 1 because some birth certificates do not report a father and his characteristics.

  9. Results are similar but a bit less precise when using all women. In our dataset, more than 15% of all births in Chile occurred to women between the ages of 15 and 19, thus justifying our lower age limit. On the other hand, less than 2% of all births occurred to women above the age of 40.

  10. The fraction of women who are university-educated is 7%, 39% has a high school education while 54% have less than high school.

  11. Notice that the intercensal extrapolations for population we use in column (1) combine the use of linear interpolations for the 1992–1999 period and adjustments for mortality, fertility, and internal and international migration for the 2000–2011 period. Notice also that the data used in column (2) come from the population surveyed in the CASEN survey (which considers dwellings and not population as the basic unit of data collection) and therefore do not depend on intercensal extrapolations and would accurately measure migration.

  12. We obtain results that are consistent when using as an outcome variable the average rank of the birth. Results using the average rank of the child are extremely similar because of the low rate of stillbirths.

  13. In analyses not reported here but available upon request, we find that there is no effect of our price index on the fraction of children born in multiple births.

  14. These results are not robust to the inclusion of region-quarter fixed effects but are to the use of population weights.

  15. Results not presented here but available in Irarrázaval (2013).

  16. We also divided the sample by occupational status of the mother and father. We find that the log births increased for both but more strongly for those who had higher occupational status.

  17. We exclude the birth rate since it is not obvious what would be measured by dividing the number of births conceived in quarter i and born in quarter j by the population of females.

  18. Results available upon request.

  19. Table omitted here but available upon request.

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Acknowledgements

Fernanda Rojas provided excellent research assistance. We also benefited from the work by Maria de la Paz Irarrázaval for her Master’s thesis written at EH Clio Lab. We would like to thank seminar participants at the 2017 SECHI meetings and the EH Clio Lab 2018 conference, editor Terra McKinnish, and two anonymous referees for valuable comments and suggestions.

Funding

We would like to thank FONDECYT (Project 1170956) for financial support.

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Correspondence to Jeanne Lafortune.

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The authors declare no competing interests.

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Responsible editor: Terra McKinnish

Data availability

All replication files can be found at: https://github.com/fagallego/babycommoditybooms.

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Appendix A: Additional Tables

Appendix A: Additional Tables

Table 9 Impact of exogenous economic shocks on fertility, adding lags, and leads
Table 10 Impact of exogenous economic shocks on fertility, robustness checks
Table 11 Impact of price index on total population, by gender, marital status, and educational attainment

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Gallego, F., Lafortune, J. Baby commodity booms? The impact of commodity shocks on fertility decisions and outcomes. J Popul Econ 36, 295–320 (2023). https://doi.org/10.1007/s00148-021-00855-0

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