Gender-Specific Local Labor Market Conditions and Fertility

Jessamyn Schaller, University of California, Davis

This paper examines the relationship between labor market conditions and birth rates, with an emphasis on the role of gender-specific labor market conditions in determining aggregate fertility. I use a state-year panel of vital statistics data and employ a fixed-efects model. To deal with the potential endogeneity of unemployment rates, I instrument for them using a "fixed coefficient" labor demand index that exploits geographic variation in industry concentration. To create a proxy for gender-specific labor market conditions, I create labor market indices that rely on both geographic variation in industry concentration and changes in the shares of men and women in each industry over time. OLS and IV results confirm previous empirical findings that increases in unemployment rates are associated with decreases in fertility. I also find that improved labor market conditions for men cause increases in fertility, while improved labor market conditions for women have the opposite-signed effect.