B63

The importance of economic development related to fertility in OECD countries.

Angela Luci, Olivier Thévenon
INED, Germany

We are concerned about the importance of economic development related to fertility in OECD countries. Knowing about the J-shaped relationship between the human development index (HDI) and total fertility rates that was recently found by Myrskylä, Kohler and Billari (2009), we single out the impact of economic development on fertility. We empirically test the hypothesis of a convex impact of economic advancement on fertility, implying a U-shaped pattern of fertility along the process of economic development, using data from the OECD area that spans the years 1960 to 2007. We use a range of econometric techniques, including 2SLS, Fixed Effects and System GMM to deal with left-out variable bias, unobserved heterogeneity, non-stationarity and endogeneity. The empirical results confirm our hypothesis even when controlling for postponement of birth and suggest that the U-shaped pattern between economic development and fertility is dominated by within-country variation. Moreover, we designate a clear turning point in the relationship between economic development and fertility. However, we find that economic development is not sufficient to explain the fertility rebound that could have been observed recently in several highly developed OECD countries.

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