There have been substantial fluctuations in birth rates in the UK since 1945, and these fluctuations will have substantial effects on the population's age distribution well into the next century. This age distribution in turn affects the labour market and pressures on the health and education sectors. In Discussion Paper No. 37, Eric De Cooman and Research Fellows John Ermisch and Heather Joshi analyze the role played by labour market developments in explaining birth rate fluctuations in England and Wales over the period 1952-1980.
De Cooman, Ermisch and Joshi assume that a couple decides each year whether to have a child during that year. The ultimate number, timing and spacing of births are the outcome of a series of decisions and accidents, and not necessarily the successful implementation of a grand strategy, formulated once and for all with perfect foresight. It is possible in the authors' framework for couples to change their reproductive goals during their childbearing careers; in fact couples need not have any explicit reproductive goals at all.
The labour market affects the decision to have a child because it determines the financial resources available to the couple and the earnings which would have to be foregone if the woman were to bear a child in a given year. Labour market variables which influence the birth rate include wage rates for men and women, the male unemployment rate, and a measure of women's attachment to paid work. The size, direction and speed of these influences are allowed to vary over different stages of the couple's life cycle. There may also be catching-up or correcting for deviations from the path towards family size norms. These norms seem to be changing only very slowly, and the authors' sample of 30 years offers relatively little explanation of family sizes.
The authors find that the labour market does influence the decision to have a child. The effect depends, however, not only on the age of the couple, but also on the number of children they already have. Increased real wages for both men and women tend to deter older parents from adding to existing families. In the early stages of family building, births are inhibited by labour markets favourable to women. But conditions in the male labour market have the opposite effect. Higher men's wages and lower male unemployment bring forward first and second births to women under 30. The authors also find that greater labour market participation by wives has encouraged a compression of childbearing into a few years in women's late twenties and early thirties.
Even in a society with little female participation in the labour market, the complexity of reactions to the male labour market alone could generate booms and busts in birth rates. These reactions are both stronger and more complex when female labour market participation is significant. The authors' estimates suggest that the unusually favourable labour market for women in Britain at the time of the Equal Pay Act account for much, though not all, of the drop in fertility in the mid- seventies. Higher female earnings led women to postpone births in this period, with a catching up in the late 1970s. De Cooman, Ermisch and Joshi note that couples at different stages in family building are likely to respond quite differently to the same change in economic variables. Many of these induced birth rate fluctuations are offset within five years and make little ultimate difference to family size. The economy and the labour market nevertheless seem to account for substantial year-to-year instability in the numbers of births.
John Ermisch discussed this research at a lunchtime meeting on 8 February. A full report of this meeting will appear in the April Bulletin.

The Next Birth and the Labour Market: A Dynamic Model of Births in England and Wales
Eric De Cooman, John Ermisch and Heather Joshi

Discussion Paper No. 37, January 1985 (HR)