Childbearing and labor market: time and space dynamics

Elena Kotyrlo, Umeå University

Fertility is an important determinant of long-run population growth and labor market conditions. The present study focuses on the effects of time and space dynamics on the description of fertility in Sweden. These effects were expected to be generated by labor mobility across municipalities. The influence of time dynamics in postponing or accelerating childbearing was assessed by considering two different effects of earnings. Firstly, the effect within one generation was considered by comparing a family’s current earnings with their earnings in the recent past and expected earnings in the future. The second effect, referred to previously as the Easterlin hypothesis, was examined through the generations by comparing a household’s earnings for a younger generation with earnings of the parental generation. The hypotheses were tested for the period 1981-2008. The study involved estimating space and time dynamics by using the SAR(2,1) model and the general method of moments for aggregate panel data. By comparing different specifications, positive spatial autocorrelation of fertility was identified. Current earnings appeared to have a negative effect on fertility rates within municipalities, and in the long-run, across them. The inverted Easterlin hypothesis was weakly supported within municipalities. The study makes an important theoretical contribution through the application of a stationarity condition and evaluation of the long-run effect in the direct, indirect and total forms of the SAR (2,1) model with second-order autoregressive and first-order spatial disturbances.