Precarious Employment and the Welfare State - Insights on Decision Making Under Risk and Uncertainty in Germany and the UK

Christian Schmitt, University of Rostock & DIW Berlin

This study investigates how precarious employment affects the fertility behavior, and how the personality trait of risk attitudes moderates the perception of objectively given uncertainties. Originating from the idea that men and women tend to postpone lasting commitments in the light of pressing uncertainties, I assume that the welfare state plays a moderating role in this relation. I contrast the liberal British welfare state that combines a low level of protection and prevalent employment uncertainties with the conservative German welfare state with moderate support levels but gender inequalities in work and care.

Using data from the German Socio-Economic Panel Study (SOEP), and the British Houshold Panel Study (BHPS) and the succeeding Understanding Society (1990 to 2015), I apply piecewise constant event-history methods to analyze the transition to parenthood in precarious employment contexts. In Germany, women tend to make their family formation choices with close reference to their past work biographies. In this sense, stable employment accelerates family formation, whereas precarious employment tends to delay it. In both Germany and the UK, this negative fertility effect of uncertainties can – in part - be contained if the individual shows a high risk propensity. Three findings are salient: 1) The compensation of uncertainties with risk lovingness is prevalent with regard to fertility decisions among women, rather than men. 2) The compensation effect is considerably stronger in the UK than in Germany, and 3) the compensation of fertility postponement does apply to fixed-term- and in marginal employment contexts, but not to unemployment. However, a pattern emerges, where risk-averse individuals with bleak chances of gaining a foothold in the labor market focus on family formation instead of a professional career. This is the case apparently, as parenthood provides them with resources like stability and social approval, resources, otherwise unobtainable in precarious employment contexts.

Presented in Session 103: Fertility in Times of Economic Uncertainty