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Does Economic Uncertainty Have an Impact on Decisions to Bear Children? Evidence from Eastern Germany

Author

Listed:
  • Sumon Kumar Bhaumik
  • Jeffrey B. Nugent
Abstract
Economic agents routinely face various types of economic uncertainty. Seldom have these various forms of uncertainty manifested themselves more sharply than in the transition economies of Central and Eastern Europe. In East Germany, the transition was especially rapid and sharp since East Germany virtually over night made the transition from the Eastern European system to the market economy of Western Germany. Uncertainties increased and many institutional and behavioral adjustments took place in a concentrated period of time. Among the latter was a sharp fall in fertility rates, leading to a growing literature on the explanation for this decline. This paper focuses directly on the link between uncertainty and childbearing decisions and examines the link at the micro level. It develops a stylized overlapping generations model showing that the relationship between economic uncertainty and childbearing decisions is not necessarily monotonic, and hence that the aforementioned inverse relationship is merely a testable hypothesis. It then uses GSOEP data for 1992 and 1996 to estimate the nature of this relationship, and concludes that while this relationship was indeed negative for East German women during these two years, the nature of uncertainty affecting their childbearing decisions differed across the years.

Suggested Citation

  • Sumon Kumar Bhaumik & Jeffrey B. Nugent, 2002. "Does Economic Uncertainty Have an Impact on Decisions to Bear Children? Evidence from Eastern Germany," William Davidson Institute Working Papers Series 491, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:2002-491
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    File URL: http://deepblue.lib.umich.edu/bitstream/2027.42/39876/3/wp491.pdf
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    References listed on IDEAS

    as
    1. Leibenstein, Harvey, 1978. "General X-Efficiency Theory and Economic Development," OUP Catalogue, Oxford University Press, number 9780195023800.
    2. Arthur Lewbel, 1997. "Constructing Instruments for Regressions with Measurement Error when no Additional Data are Available, with an Application to Patents and R&D," Econometrica, Econometric Society, vol. 65(5), pages 1201-1214, September.
    3. Jennifer Hunt, 2002. "The Transition in East Germany: When Is a Ten-Point Fall in the Gender Wage Gap Bad News?," Journal of Labor Economics, University of Chicago Press, vol. 20(1), pages 148-169, January.
    4. Witte, James C. & Wagner, Gert G., 1995. "Declining Fertility in East Germany After Unification: A Demographic Response to Socioeconomic Change," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 21(2), pages 387-397.
    5. Michaela R. Kreyenfeld, 2000. "Employment careers and the timing of first births in East Germany," MPIDR Working Papers WP-2000-004, Max Planck Institute for Demographic Research, Rostock, Germany.
    6. Priya Ranjan, 1999. "Fertility Behaviour under Income Uncertainty," European Journal of Population, Springer;European Association for Population Studies, vol. 15(1), pages 25-43, March.
    7. Adriaan S. Kalwij, 2000. "The effects of female employment status on the presence and number of children," Journal of Population Economics, Springer;European Society for Population Economics, vol. 13(2), pages 221-239.
    8. Michaela R. Kreyenfeld, 2000. "Educational attainment and first births: East Germany before and after unification," MPIDR Working Papers WP-2000-011, Max Planck Institute for Demographic Research, Rostock, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Sunnee Billingsley, 2010. "The Post-Communist Fertility Puzzle," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 29(2), pages 193-231, April.
    2. Francesca Fiori & Francesca Rinesi & Antonella Pinnelli & Sabrina Prati, 2013. "Economic Insecurity and the Fertility Intentions of Italian Women with One Child," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 32(3), pages 373-413, June.
    3. Dimiter Philipov & Zsolt Spéder & Francesco C. Billari, 2005. "Now or Later? Fertility Intentions in Bulgaria and Hungary and the Impact of Anomie and Social Capital," VID Working Papers 0507, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna.
    4. Michaela Kreyenfeld & Gunnar Andersson & Ariane Pailhé, 2012. "Economic Uncertainty and Family Dynamics in Europe," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 27(28), pages 835-852.
    5. Zsolt Spéder & Balázs Kapitány, 2009. "How are Time-Dependent Childbearing Intentions Realized? Realization, Postponement, Abandonment, Bringing Forward," European Journal of Population, Springer;European Association for Population Studies, vol. 25(4), pages 503-523, November.
    6. Aart C. Liefbroer & Dimiter Philipov & Francesco C. Billari, 2006. "The Postponement of Childbearing in Europe: Driving Forces and Implications," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 4(1), pages 1-17.
    7. Michaela R. Kreyenfeld & Gunnar Andersson & Ariane Pailhé, 2012. "Economic uncertainty and family dynamics in Europe (Introduction to special issue of Demographic Research)," MPIDR Working Papers WP-2012-006, Max Planck Institute for Demographic Research, Rostock, Germany.
    8. Johannes Huinink & Michaela R. Kreyenfeld, 2004. "Family formation in times of social and economic change: an analysis of the 1971 East German cohort," MPIDR Working Papers WP-2004-013, Max Planck Institute for Demographic Research, Rostock, Germany.
    9. Michaela Kreyenfeld & Gunnar Andersson & Ariane Pailhé, 2012. "Economic Uncertainty and Family Dynamics in Europe: Introduction," Post-Print hal-02081826, HAL.
    10. Dimiter Philipov, 2002. "Fertility in times of discontinuous societal change: the case of Central and Eastern Europe," MPIDR Working Papers WP-2002-024, Max Planck Institute for Demographic Research, Rostock, Germany.
    11. Elena Koytcheva & Dimiter Philipov, 2008. "Bulgaria: Ethnic differentials in rapidly declining fertility," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 19(13), pages 361-402.
    12. Michaela R. Kreyenfeld, 2005. "Economic uncertainty and fertility postponement: evidence from German panel data," MPIDR Working Papers WP-2005-034, Max Planck Institute for Demographic Research, Rostock, Germany.

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    More about this item

    Keywords

    economic uncertainty; fertility; childbearing decisions; transition;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • P36 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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