Fertility and Female Employment Dynamics in Europe

The Effect of Using Alternative Econometric Modeling Assumptions

by Pierre-Carl Michaud, Konstantinos Tatsiramos

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The authors investigate the direct and long-run effects of fertility on employment in Europe estimating dynamic models of labor supply under different assumptions regarding the exogeneity of fertility and modeling assumptions related to initial conditions, unobserved heterogeneity and serial correlation in the error terms. They find overall large direct and long-run effects of giving birth on employment probabilities, and these effects differ considerably across countries. They find that within countries the results are sensitive to the statistical assumption made on initial conditions, the inclusion of serial correlation and the assumption of strict exogeneity of children. However, the pattern across countries is robust to these assumptions. They show that such patterns are largely consistent with prevailing institutional differences related to the flexibility of the labor markets and family policies.

This paper series was made possible by the NIA funded RAND Center for the Study of Aging and the NICHD funded RAND Population Research Center.

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