Where Are the Babies? Labor Market Conditions and Fertility in Europe

Cross-country differences in both the age at first birth and fertility are substantial in Europe. This paper uses distinct fluctuations in unemployment rates across European countries during the 1980s and the 1990s combined with broad differences in their labor market arrangements to analyze the associations between fertility timing and the changing economic environment with close to 50,000 women from 13 European countries. First, it employs time-varying measures of aggregate market conditions in each woman's country as covariates and second, it adds micro-measures of each woman's labor market history to the models. High and persistent unemployment in a country is associated with delays in childbearing (and second births). The association is robust to diverse measures of unemployment and to controls for family-friendly policies. Besides moderate unemployment, a large public employment sector (which provides security and benefits) is coupled with faster transitions to all births. Women with temporary contracts, mostly in Southern Europe, are the least likely to give birth to a second child.