Will the Stork Return to Europe and Japan? Understanding Fertility within Developed Nations

We seek to explain the differences in fertility rates across high-income countries by focusing on the interaction between the increasing status of women in the workforce and their status in the household, particularly with regards to child care and home production. We observe three distinct phases in women's status generated by the gradual increase in women's workforce opportunities. In the earliest phase, characteristic of the 1950s and 1960s in the United States, women earn low wages relative to men and are expected to shoulder all of the child care at home. As a result, most women specialize in home production and raising children. In an intermediate stage, women have improved (but not equal) labor market opportunities, but their household status lags. Women in this stage are still expected to do the majority of child care and household production. Increasing access to market work increases the opportunity cost of having children, and fertility falls. Female labor force participation increases. Working women in this phase of development have the strongest disincentives to having additional children since the entire burden of child care falls on them. In the final phase of development, women's labor market opportunities begin to equal those of men. In addition, the increased household bargaining power that comes from more equal wages results in much higher (if not gender-equal) male participation in household production. Female labor force participation is higher than in the intermediate phase. The increased participation of men in the household also reduces the disincentives for women to have additional children, and fertility rates rise compared to the intermediate phase. The intermediate, low-fertility phase might describe Japan, Italy, and Spain in the present day, while the Scandinavian countries, the Netherlands, and the modern-day United States may be entering the final phase. After presenting the empirical evidence, we predict that high-income countries with the lowest fertility rates are likely to see an increase in fertility in the coming decades.