Working Paper: CEPR ID: DP13374
Authors: Bastien Chabferret; Paula Gobbi
Abstract: Using the US Census waves 1940-1990 and Current Population Surveys 1990-2010, we look at how economic uncertainty affected fertility cycles over the course of the XXth century. We use cross-state and cross-cohort variation in the volatility of income growth to identify the causal link running from uncertainty to completed fertility. We find that economic uncertainty has a large and robust negative effect on fertility. This finding contributes to the unraveling of the determinants of the post-WWII baby boom. Specifically, the difference in economic uncertainty endured by women born in 1910 compared to that faced by women born in 1935 accounts for between 45% and 61% of the one child variation across these cohorts. We hypothesize that a greater economic uncertainty increases the risk of large consumption swings, which individuals mitigate by marrying later, postponing fertility, and ultimately decreasing their completed fertility.
Keywords: baby boom; baby bust; fertility; economic uncertainty
JEL Codes: J11; J13; E32; N30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| economic uncertainty (D89) | consumption swings (E21) |
| economic uncertainty (D89) | completed fertility (J13) |
| volatility of income growth (E25) | economic uncertainty (D89) |
| economic uncertainty (D89) | marriage (J12) |
| volatility of income growth (E25) | completed fertility (J13) |