Working Paper: CEPR ID: DP14139
Authors: Nezih Guner; Ezgi Kaya; Virginia Sanchez-Marcos
Abstract: The total fertility rate is well below its replacement level of 2.1 children in high-income countries. Why do women choose such low fertility levels? We study howlabor market frictions affect the fertility of college-educated women. We focus ontwo frictions: uncertainty created by dual labor markets (the coexistence of jobs withtemporary and open-ended contracts) and inflexibility of work schedules. Using richadministrative data from the Spanish Social Security records, we show that womenare less likely to be promoted to permanent jobs than men. Temporary contracts arealso associated with a lower probability of first birth. With Time Use data, we alsoshow that women with children are less likely to work in jobs with split-shift schedules,which come with a fixed time cost. We then build a life-cycle model in which marriedwomen decide whether to work or not, how many children to have, and when to havethem. In the model, women face a trade-off between having children early and waitingand building their careers. We show that reforms that reduce the labor market dualityand eliminate split-shift schedules increase the completed fertility of college-educatedfrom 1.52 to 1.88. These reforms enable women to have more children and have themearly in their life-cycle. They also increase the labor force participation of women andeliminate the employment gap between mothers and non-mothers.
Keywords: fertility; labor market frictions; temporary contracts; split-shift schedules
JEL Codes: E24; J13; J21; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Eliminating duality and split-shift schedules (J22) | Increase in completed fertility (J13) |
| Labor market reforms (J48) | Increase in total fertility rate (J13) |
| Temporary contracts (M55) | Lower likelihood of having children (J13) |
| Split-shift schedules (J22) | Lower likelihood of working mothers in split-shift jobs (J22) |