Reversing the reversal? The cross-country correlation between female labour market participation and fertility revisited Anna Matysiak and Tomáš Sobotka “Family dynamics, fertility choices, and family policy” Oslo

Background Many publications since around 2000 (esp ): the initially negative cross-country correlation between female labour force participation (FLFP) and period total fertility rates (TFR) reversed from negative to positive in (Western) Europe and OECD countries around mid-1980s Source: Rindfuss et al. (2003) Source: Engelhardt and Prskawetz (2004)

Background The reversal received many interpretations: Cross-country differences in policies, work-family incompatibility (Rindfuss et al. 2004) Labour market rigidities in Southern Europe (Ahn and Mira 2002, Adsera 2005) Time series correlations remain negative or turn insignificant (Engelhardt et al. 2004, Kögel 2004) Split correlation (Lesthaeghe and Permanyer 2014)

Revisiting the correlation The positive TFR – FLFP correlation has become one of the key stylised facts about fertility in the developed world How solid is this link? Our contribution: Looking at the recent data through 2012 (most previous research extends until around 2000) Refining the measurement of the LFP: excluding early reproductive (time in education) and post-reproductive ages Addressing the split correlation Looking at smaller regions (NUTS2) Adding a cohort dimension; addressing possible tempo effect in period TFR Extending the analysis to CEE countries (wherever possible)

Data Focus: Period: Cohorts: countries: EU-15, Norway and Switzerland, 5 outside Europe (Australia, Canada, Japan, New Zealand, US), 14 Central & Eastern Europe (some analyses only) FLFP by age (focus: and 25-44): from LFS and population censuses, mostly from OECD Employment Database, ILO Laborsta Database + national statistical offices cohort measures (age 25-39) reconstructed from period FLFP Period and cohort TFRs: computations based on Eurostat data, national statistical offices, Human Fertility Database; small part of cohort TFR projected for cohorts

Changing the age groups of LFP measures

The cross-country correlation between FLFP and TFR, Data for “Western” OECD countries, different age specifications of FLFP

The “disappearing correlation”: partly due to country selection? Comparing the whole set of countries with “Western Europe” and a consistent set of countries observed since 1975

What if we look at female employment rates instead of FLFP? Comparing the correlation for the whole set of countries: TFR vs. FLFP (ages 25-39) and TFR vs. female employment rates (ages 25-39)

Why has the correlation disappeared?

Labour force participation rates (%), women aged Period total fertility rate The high LFP countries (LFPR in 1980 >70%): Denmark, Finland, Sweden The medium-high LFP countries (LFPR in %): Portugal, Belgium, Canada, France, United States, Norway The medium-low LFP countries (LFPR in %): Japan, Australia, Austria, United Kingdom, West Germany The low LFP countries (LFPR in 1980 <50%): Ireland, Spain, Greece, Netherlands, New Zealand, Italy, Luxembourg

Why has the correlation disappeared? Until mid-1990s: Trends in correlation driven by changes in the TFR From around 2000: Trends in correlation driven by changes (convergence) in FLFP levels Simple simulation: what would happen if we “froze” the TFR and /or FLFP at their 1995 levels?

Changing the country coverage and the analytical units

Split - correlation

What if we include CEE countries? No correlation would be observed in the 1990s and 2000s if the CEE countries were taken into account.

What if we go down to subnational level? The correlation at the regional (NUTS-2) level in EU-15, Norway and Switzerland has been negative (in both country groups) but has been weakening in recent years. The developments in CEE were different. Note: Non-European countries are excluded from this analysis The cross-region correlation is based on within country variation in TFR and FLFPR

Using cohort measures

Why study cohort correlation? Life-cycle indicators of fertility & labour involvement Unaffected by short-term ups and downs that can influence period data Solving the “tempo effect” problem in the period TFR: cohort fertility gives the real measure of fertility “quantum” unaffected by the changes in timing of childbearing

The cohort “story”: much weaker correlation, but similar trends The cross-country correlation between cohort TFR and cohort FLFP as compared with the period correlation, 23 OECD countries The cohort correlation peaks in the 1970 cohort at a low level of 0.28

Discussion

Conclusions The period cross-country correlation for „Western” OECD countries disappears after 2010 when FLFP analysed for the key reproductive & post-education ages only (25-39) This trend driven by a strong cross-country convergence towards a similar high FLFP levels around 80% The finding of the strong positive period cross-country correlation for „Western” OECD countries in the 1990s was partly driven by: –Measures used (period indicators, broad age groups in LFP measures) –Analytical units used (negative although weakening correlation at the regional level) –Countries covered (no correlation after adding CEE countries, split correlation) Weakening cross-regional within-country correlation is appealing and requires further investigations

Discussion Future: The correlation may come and go as the relationship becomes volatile due to similar levels of LFP  small changes in LFP or TFR may trigger shifts in correlations Adsera (2004) had the most accurate foresight It is likely, however, that the positive correlation between fertility and female labor participation may fade away (…) As women in countries with the lowest participation rates gradually enter the labor force, female participation rates will slowly converge across developed countries. However, if their fertility does not increase (due to lack of changes in labor market institutions),the relation between fertility and participation in the cross-section of OECD countries should become flat in the near future. Adserà, A “Changing fertility rates in developed countries. The impact of labour market institutions.” Journal of Population Economics 17(1): 1-27.

Research presented here was funded by the European Research Council under the European Union ’ s Seventh Framework Programme (FP7/ ) / ERC Grant agreement n° (EURREP). EURREP website: