Childbearing and the Labor Market: Time and Space Dynamics

Abstract

Fertility is an important determinant of long-run population growth and labor market conditions. The present study focuses on the effects of time and space dynamics on the description of fertility in Sweden. The influence of time dynamics in postponing or accelerating childbearing was assessed by considering two different effects of earnings. Firstly, the effect within one generation was considered by comparing a family's current earnings with their earnings in the recent past and expected earnings in the future. The second effect, referred to previously as the Easterlin hypothesis, was examined through the generations by comparing a household's earnings for a younger generation with earnings of the parental generation. These effects were expected to be generated by labor mobility across municipalities. The empirical evidence for the period 1985-2008 involved estimating space and time dynamics by using a spatial first-order and serial second-order panel data model. By comparing different specifications, the hypothesis about positive spatial autocorrelation of fertility was supported. Current earnings appeared to have a negative effect on fertility rates within municipalities, and in the long-run, across them. The study makes an important theoretical contribution through the application of stationarity conditions and evaluation of the long-run effects in the direct, indirect and total forms of the model.