Unemployment and Fertility: A Long Run Relationship
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Unemployment and Fertility: A Long Run Relationship Jose Maria Fernandez‑Crehuet1 · Luis Alberiko Gil‑Alana2,3 · Cristina Martí Barco1 Accepted: 9 August 2020 © Springer Nature B.V. 2020
Abstract The paper examines the relationship between the unemployment rate and the fertility rate in a number of European countries along with Japan and the US. We use fractional inte‑ gration and cointegration techniques to establish this long run relationship. The analysis shed some light on the degree of persistence of the series, and on whether policy actions are required for highly persistent series. The evidence suggests that these two variables (unemployment and fertility rates) are not related in the long run. However, in the short run, assuming that unemployment rate is weakly exogenous, the coefficient relating the two variables is found to be negative in four countries: the Netherlands, Portugal, Spain and the US. Keywords Unemployment rate · Fertility rate · Long memory · Fractional integration · Fractional cointegration JEL Classification C22 · C32 · J13 · J64
1 Introduction In the last 100 years, with the emergence of women in the labor market, it is necessary to study the gap between the intention of having children and actually having them. The persistent gap between desired and achieved fertility has stirred concerns about unhappy citizens underachieving their fertility goals, and it has provided a strong argument in favor of social policies aimed at removing obstacles such as unstable working conditions or dif‑ ficulties in combining family and work (Testa 2014). This incorporation of women into jobs across Europe has led to a decline in fertility (Adserà 2018). Although the fall is wide‑ spread throughout Europe, not all countries reflect the same incidence. In countries such as Greece or Spain, and in general in southern Europe, fertility is lower than in the rest, mainly because states do not help future parents and jobs are more * Luis Alberiko Gil‑Alana [email protected] 1
Universidad Politécnica de Madrid, Madrid, Spain
2
University of Navarra, Faculty of Economics and NCID (ICS), Edificio Amigos, 31009 Pamplona, Spain
3
Universidad Francisco de Vitoria, Madrid, Spain
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precarious and have worse conditions. Other countries, such as Austria, Germany or Swit‑ zerland do not have a model of family-work balance, which delays the decision to have children, as parents would need to keep working in order to maintain the child’s needs. In Belgium, however, we observe a perfect model of family life and work balance, a fact that immediately encourages increased fertility. Women in countries where more women are employed have been accommodated with more extensive family service provisions. This would explain why fertility rates are higher in Western Europe where family services are more extensively funded and available than in Eastern Europe where family services are scarce. For Eastern European countries, we also identified countervailing forces that
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