Births, Marriages, and the Economic Environment in Greece: Empirical Evidence Over Time

Abstract

This paper investigated the impact of the macroeconomic environment on family demographic outcomes in Greece at the macro level. We focused on the dynamic relationship between births, marriages, and economic indicators, using time-series data covering the period 1960–2014. Our empirical analysis was based on impulse response functions and forecast error variance decomposition in the framework of vector autoregressive (VAR) models. Our main results showed that birth rate and marriage rate positively responded to income and employment shocks, with the estimated responses being sizable, especially for the birth rate. Income effects and status-shifts effects (proxied by private consumption) influenced the birth rate and marriage rate in opposite ways. The unemployment rate produced strong negative effects on births, while marriage rate responses were substantially lower. Innovation accounting showed that a large proportion of the h-step forecast error variance of birth and marriage rate was accounted for by innovations (shocks) in the economic indicator variables for long-term horizons. The ongoing Greek economic crisis has contributed to the (negative) responses of births and marriages to income and employment shocks. Responses to the unemployment rate were still large when excluding the crisis years or when removing crisis effects on the series’ long-run component (trend).