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.


This study investigates how precarious employment affects the fertility behavior of men and women, and how the personality trait of risk attitudes moderates the perception of objectively given employment uncertainties. Originating from the basic idea that men and women tend to postpone lasting commitments in the light of pressing uncertainties, I assume that the welfare state plays a key role in this relation. Depending on the extent of social support and the protection from life-course risks provided by the welfare state this can curb vulnerabilities of labor market related uncertainties. In order to investigate the role, the welfare state plays in the fertility-uncertainty nexus, I contrast the liberal British welfare state that combines a low level of protection and prevalent employment uncertainties with the conservative German welfare state. The latter offers moderate support, however under the imprint of an ongoing labor market deregulation, and lingering gender inequalities in work and care.

Using data from the German Socio-Economic Panel Study (SOEP), and the British Houshold Panel Study (BHPS) as well as the succeeding Understanding Society study (1990 to 2015), I apply piecewise constant event-history methods to analyze the transition to parenthood In front of employment uncertainties. I find that in Germany, women increasingly tend to make their family formation choices with close reference to their past work biographies and future employment opportunities. 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 countered if the individual shows a high risk propensity. Three findings are salient: 1) The compensation of uncertainties with risk lovingness with regard to fertility choices is prevalent 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 in fixed-term- and in marginal employment contexts, but not if a person is unemployed. 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 an employment career. This is the case apparently, as parenthood provides them with resources like stability and social approval, resources, which are otherwise unobtainable in precarious employment contexts.

Presented in Session 1165: Fertility