Fertility and Female Labor-Force Participation: Estimates and Projections for Austrian Women Aged 20-30

Neusser, K. (1981). Fertility and Female Labor-Force Participation: Estimates and Projections for Austrian Women Aged 20-30. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-81-040

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Abstract

The sharp and unexpected decline in fertility rates during the 1960s and 1970s provoked a great deal of controversy. What was the cause of this decline? What will be its future path? There were two opposing schools in this debate: Becker and the "human capital" school on one side and Easterlin and his school on the other. The former emphasized that the rise in women's real wage rates drove up the opportunity cost of having children, whereas the latter emphasized the age structure of the population.

This paper presents these two lines of thought and constructs a model with ingredients from both schools. In this model the decision of having children or of entering the labor force is considered as a simultaneous one. Therefore the model tries to explain simultaneously the fertility rate and the labor-force participation rate. This structural model is then estimated for Austrian women aged 20-30 with a system estimator that takes into account the simultaneity in the model. These estimates together with some assumptions about exogenous variables are used to give some projections to the year 2000 for the endogenous variables, the fertility rates and the labor-force participation rate of women aged 20-30.

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