An explanation of the positive correlation between fertility and female employment across Western European countries

Tomas Kögel, Loughborough University

Recent literature shows the puzzling result of a positive and significant cross-country correlation between the total fertility rate (TFR) and the female labour force participation rate (FLP) across Western European countries. The present study shows that this cross-country correlation becomes negative and significant, once one corrects the TFR for a distortion from a tempo effect and controls in cross-country regressions for child care use outside the home and female long-term unemployment. Countries that have a low FLP also have a large tempo effect, low child care use outside the home and high female long-term unemployment. For this reason, failure to control for these variables leads to an omission bias of the coefficient of the FLP, because the FLP picks up some of the effects of the omitted variables. This result survives when the FLP is treated as an endogenous variable.