Fertility and women’s employment reconsidered: a macro-level time series analysis for developed countries, 1960-2000

This paper examines causality and parameter instability in the long-run relationship between fertility and women’s employment. This is done by a cross-national comparison of macro-level time series data from 1960–2000 for France, West Germany, Italy, Sweden, the UK, and the USA. By applying vector error correction models (a combination of Granger-causality tests with recent econometric time series techniques) we find causality in both directions. This finding is consistent with simultaneous movements of both variables brought about by common exogenous factors such as social norms, social institutions, financial incentives, and the availability and acceptability of contraception. We find a negative and significant correlation until about the mid–1970s and an insignificant or weaker negative correlation afterwards. This result is consistent with a recent hypothesis in the demographic literature according to which changes in the institutional context, such as childcare availability and attitudes towards working mothers, might have reduced the incompatibility between child-rearing and the employment of women.