The Impact of Economic Variables on the Timing of Births and Parity Progression Ratio: A Question Revisited for an Individual Panel of French Women

Olivia Ekert-Jaffe, Institut National d'Études Démographiques (INED)
Rémi Mougin, Institut National d'Études Démographiques (INED)

The question of impact of women’s salaries on the timing of births and parity progression has gained a renewed interest: with increasing unemployment spells for men, the traditional dominating substitution effect (which has introduced a drop in fertility with rising women’s wages since a child become much more costly) can be cancelled by (i) the income effect (a high salary also has the consequence of releasing/loosening budget constraints which prevent the number of children per family from increasing); and (ii) generous maternity leaves. In this paper we thoroughly investigate these relations, using a multi state dynamic duration model implemented on long term individual panel data–with instrumented individual salaries and taking into account unobserved heterogeneity in two manners. We test economic versus demographic models. There is indeed a negative impact of women’s wages on the timing of births for every parity. Maternity leaves nevertheless partly compensate for this negative impact.