Does female employment affect fertility? Evidence from the United Kingdom

Abstract

This paper tests the validity of the proposition that there is a causal relationship between fertility choice and female employment in a multivariate framework during the period 1958–1998 in the United Kingdom. Following recent advances in economic and demographic theory the nexus between female employment and fertility is reexamined taking into account changes in the labor market and the overall real economic activity. Our key finding is that expanding the estimating equations to control for the influences of changes in real wages and real output creates a positive relationship between fertility and female employment and a negative relationship between fertility and real wages. Finally, fertility choice should not be considered exogenous to the female employment, the labor market or the growth process.

Acknowledgements

The views expressed in this paper are those of the author and not those of the Bank of Greece. The author wishes to thank an anonymous referee for his valuable comments in a previous version of this paper. All remaining errors and deficiencies are the responsibility of the author.

Notes

1 Present address: Economic Research Department, Bank of Greece, El. Venizelou 21, 102 50 Athens, Greece.

1 The male breadwinner, or family wage model, assumes that the father goes out to work while the mother stays at home to look after the children. According to the model the man is the provider and protector of the family and the woman is the one who cares and reproduces children.

2 This approach has several advantages over the Engle and Granger (1987) technique employed in other empirical studies. First, the Johansen and Juselius method tests for the number of cointegrating vectors between the variables. These tests are based on the trace statistic test and the maximum eigenvalue test. Second, it treats all variables as endogenous thus avoiding an arbitrary choice of dependent variable. Third, it provides a unified framework for estimating and testing cointegrating relations within the framework of a vector error-correction model.

3 For other applications of this technique in different topics, see Masih and Masih (1996) and Hondroyiannis and Papapetrou (2000, 2001).

4 The KPSS statistics are known to be sensitive to the choice of truncation parameter l and tend to decline monotonically as l increases.

5 It is known that the Johansen cointegration procedure is biased towards the rejection of the null hypothesis in a small sample (Cheung & Lai, 1993). Therefore, in the estimation procedure we used the critical values obtained from Johansen and Juselius (1990) and the critical values adjusted for small sample (see note to Table 3). Both values reject the null of zero cointegrating vectors in favor of one cointegrating vector at 5 and 10% level of significance.

6 The results are available from the author upon request.

7 The results for the Chow test are obtained using PcFiml 9.0 (see Doornik & Hendry, 1997).

8 Pesaran and Shin (1996) have proposed the estimation of persistence profile to estimate the speed with which the effect of system-wide shocks on cointegrating relationship disappears. In particular, the persistence profile at n periods after a shock can be viewed as the variance of the difference between the forecast for n periods if a shock had occurred and the forecast for n periods if no shock had occurred.