An investigation of cointegration and causality between fertility and female labour force participation

Abstract

Applying Hsiao's version of the Granger causality method, this paper examines the causality between fertility and female labour participation using transformed US data for the period 1948–93. The PP tests reveal that the original series are not stationary; therefore, a first differencing is performed. This study finds that there is a undirectional causality running from BR to FR with no feedback. The results confirm the hypothesis that the presence of small children discourages a woman from seeking employment outside the house, yet employment does not affect women's decision to have children.