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Labor Market Institutions and Fertility

Author

Listed:
  • Nezih Guner
  • Ezgi Kaya
  • Virginia Sánchez-Marcos
Abstract
The total fertility rate is as low as 1.3 in some high-income countries, and factors behind such low levels are not well understood. We show that uncertainty created by dual labor markets, the coexistence of temporary and open-ended contracts, and the inflexibility of work schedules are crucial to understanding low fertility. We focus on college-educated women and document that temporary contracts are associated with a lower probability of first birth using rich administrative data from the Spanish Social Security records. With Time Use data, we also show that women with children are less likely to work in jobs with split-shift schedules, with a long break in the middle of the day. Split-shift schedules present a concrete example of inflexible work arrangements and fixed time cost of work. We then build a life-cycle model in which married women decide whether to work or not, how many children to have, and when to have them. Reforms that eliminate duality or split-shift schedules increase the completed fertility of college-educated from 1.54 to around 1.7. These reforms also increase women's labor force participation and eliminate the employment gap between mothers and non- mothers. Reforming these labor market institutions and providing childcare subsidies increase fertility to 1.86.

Suggested Citation

  • Nezih Guner & Ezgi Kaya & Virginia Sánchez-Marcos, 2021. "Labor Market Institutions and Fertility," Working Papers 1297, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:1297
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    References listed on IDEAS

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    More about this item

    Keywords

    fertility; Labor market institutions; temporary contracts; split-shift schedules; childcare subsidies;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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