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 relationshipbetween fertility and women’s employment. This is done by a cross-national comparisonof 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 (acombination of Granger-causality tests with recent econometric time series techniques)we find causality in both directions. This finding is consistent with simultaneousmovements of both variables brought about by common exogenous factors such as socialnorms, social institutions, financial incentives, and the availability and acceptability ofcontraception. We find a negative and significant correlation until about the mid–1970sand an insignificant or weaker negative correlation afterwards. This result is consistentwith a recent hypothesis in the demographic literature according to which changes in theinstitutional context, such as childcare availability and attitudes towards workingmothers, might have reduced the incompatibility between child-rearing and theemployment of women.