The effect of unemployment on fertility

Signe Hald Andersen, Rockwool Foundation Research Unit, Denmark
Berkay Ozcan, London School of Economics and Political Science (LSE)

We analyze the causal effect of unemployment on fertility. Neoclassical theory of fertility has ambiguous (both positive and negative) predictions regarding the effect of unemployment for women. Additionally, existing empirical research shows contradictory results and makes a weak case for exogeneity of unemployment to fertility behavior. We suggest that (unexpected) firm closures constitute an exogenous source of unemployment and adopt it as an instrument to estimate husbands’ and wives’ fertility response, using a unique administrative panel data from Denmark, which includes all residents in Denmark between 1982 and 2006. It contains monthly information about employment, relationship and a very-detailed fertility history -including stillbirths and miscarriages- of individuals as well as information about the firms that they work in. We estimate our models separately for men and women. Our preliminary results show that unemployment as a result of a firm closure negatively affects both women’s and men’s completed fertility and positively women’s timing of the first birth. Men do not appear to delay timing of the first birth due to unemployment.