Women’s Wages and Fertility Revisited. Evidence from a Country with Good Data
Tom Kornstad, Research Dep., Statistics Norway
However, as women are located at different points on the U-shaped curve, it is hard to summarize the total effect of wages on womens'' fertility. The fact that the parameter estimates of the hazard model determines the effect on the log hazard and not the probability of have given birth at a particular age, complicates the interpretation of the parameter estimates further. To fully understand the relationship between wages and fertility, we also want to do simulations based on the estimated model. Then can calculate the relationship between the age of the woman and the probability of giving birth to the first child, the second child and the third child, respectively. Using an actual sample of women (we have register data) we can also calculate the number of women giving birth to one child, two children or three children.
The focus will be on the effect of wage changes on fertility. In the first simulation we want to study the effect of a general wage increase for all women. This type of simulation will provide us with knowledge about whether the effect of wage changes has changed across the four different cohorts we are analyzing. During the period covered by the sample there has been several expansions of family policies in Norway, and this might have changed the association between wages and fertility across cohorts. There has been an increase in paid parental leave from about three months in the mid 1970s to more than a year in 2009, the number of childcare centres has grown considerably, and a system of maximum prices has greatly reduced the prices in care centres.
In the second set of simulations we want the study whether the effect of a wage change on fertility vary across women in different parts of the wage distribution. Are women in the lower part of the wage distribution more sensitive to wage changes than women in the upper part of the distribution, and if they are, how large is the difference? To analyze that, we will divide the women into three groups according to wage, low wage women, medium wage women and high wage women. Then we can do simulations for each of the three groups where we increase the wage rate and study the effects for transitions to first, second and third birth, respectively. Also in these simulations we can compare the effects across different birth cohorts.
The main dataset covers all women living in Norway during the period 1974–2009. Here we observe the date of birth of all children, as well as the woman’s age and other relevant characteristics of the woman. A special feature of our approach is that we have access to data from the Norwegian Labour Force Survey for every year 1974–2009, i.e., for the same period as for the register data on fertility. Linking information about hours of work from this survey with information about actual wage incomes from the income registries, we can calculate wages as the fraction of wage incomes and actual hours of work, and estimate separate wage equations for each of the years 1974–2009. Based on the estimated equations we imputed year-specific hourly real wages (2005 price level) for all women in the study. By estimating the wage equations separately for each year, business cycle variations are allowed to influence wages and birth transitions.
Presented in Session 1235: Posters