Industrial Robots and Fertility Timing in Europe

This paper links the effects that automation has on labor to fertility timing decisions. The intuition behind such a relation is formalized by an optimal stopping model of fertility, where having a child is viewed as an investment. Its opportunity cost is modeled as a stochastic process, which changes are due to the displacement and productivity effects of automation, the first being assumed to concern routine workers the most. The model suggests that labor automation increases the value of waiting to have children for agents with a medium level of education, while it decreases it for those at the extremes of the education distribution. European panel data at the regional level are then used to give empirical support to the theoretical predictions, by constructing a measure of local exposure to industrial robotics. Higher exposure is associated with a postponement of fertility in regional labor markets with a high share of women with secondary education, and with an anticipation of it in regions with a prevalence of women with either primary or tertiary education