Working Paper: CEPR ID: DP8590
Authors: Moshe Hazan; Hosny Zoabi
Abstract: Conventional wisdom suggests that in developed countries income and fertility are negatively correlated. We present new evidence that between 2001 and 2009 the cross-sectional relationship between fertility and women's education in the U.S. is U-shaped. At the same time, average hours worked increase monotonically with women's education. This pattern is true for all women and mothers to newborns regardless of marital status. In this paper, we advance the marketization hypothesis for explaining the positive correlation between fertility and female labor supply along the educational gradient. In our model, raising children and home-making require parents' time, which could be substituted by services bought in the market such as baby-sitting and housekeeping. Highly educated women substitute a significant part of their own time for market services to raise children and run their households, which enables them to have more children and work longer hours. Finally, we use our model to shed light on differences between the U.S. and Western Europe in fertility and women's time allocated to labor supply and home production. We argue that higher inequality in the U.S. lowers the cost of baby-sitting and housekeeping services and enables U.S. women to have more children, spend less time on home production and work more than their European counterparts.
Keywords: fertility; US; Europe; differences; women's education
JEL Codes: E24; J13; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| women's education (I24) | total fertility rate (TFR) (J13) |
| total fertility rate (TFR) (J13) | women's education (I24) |
| higher levels of education (I23) | substitution of market services for own time (J29) |
| substitution of market services for own time (J29) | higher fertility (J13) |
| income inequality (D31) | lower cost of childcare services (J13) |
| lower cost of childcare services (J13) | higher fertility (J13) |
| women's education (I24) | labor supply (J20) |
| labor supply (J20) | higher fertility (J13) |