Earnings and first birth probability among Norwegian men and women 1995-2010

Abstract

1. IntroductionThe relationship between female earnings and fertility is context dependent. Cross-country comparisons indicate that in contexts with weak institutional support for families and/or gender traditional division of labour in the family, a conflict between employment and childbearing leads to a negative relationship between earnings and fertility for women. As the institutional support for families increase and/or the division of labour in the family becomes more gender equal, employment facilitates the transition to motherhood for women, and a positive correlation between female earnings and fertility emerges (Andersson, Kreyenfeld, and Mika 2014; Berninger 2013; Matysiak 2011). The fact that employment comes to facilitate the transition to motherhood is among the main explanations suggested for the shift to a positive correlation between human development and fertility found in macro-level analysis (Luci-Greulich and Thevenon 2014; Myrskyla, Kohler, and Billari 2009). However, no previous study has used micro-level data to assess how the correlation between earnings and fertility responds to changes over time in gender relations and the institutions surrounding the family.As common in fertility research, women have been the focal persons in studies of earnings and fertility (Goldscheider and Kaufman 1996). Knowledge of how context shapes the relationship between men's earnings and fertility is therefore limited. Over the last few decades, the time fathers spend with their young children has increased substantially, particularly in the Nordic countries (Dribe and Stanfors 2009; Hook 2006; Kitterod and Ronsen 2013). As men spend an increasing amount of time on childrearing, a conflict between fathering and career development may emerge, potentially inducing some high-earning men to forgo fatherhood. If so, the correlation between men's earnings and fertility is expected to become less positive over time. 2Norway constitutes a prime example of convergence of gender roles in the family and workplace. Since the 1980s, mothers have increased their efforts in paid work, while fathers have increasingly participated in household work (Kitterod and Ronsen 2013). As these changes play out, the relationship between earnings and fertility may be affected: Previous comparative studies lead to the expectation that the relationship between female earnings and fertility will become more positive as women's opportunity cost decreases, while the relationship between male earnings and fertility becomes less positive due to the increasing opportunity cost of childbearing for men.Using data from Norwegian administrative registers, I study the way the correlation between lagged annual earnings and first birth probability changes in the period 1995 to 2010. The study is based on highly accurate register information on the annual earnings and first births of all Norwegian men and women who at some point in the period from 1995 to 2010 were both in the age range 22-45 and at risk for a first birth (N~ 8 million person years). I estimate the correlation between earned income and the yearly probability of entering parenthood using discrete time hazard regression. The extraordinarily rich data set allows one to describe changes over time separately, by sex, through estimation of separate models by year and sex.2. Theoretical perspectives on earnings and the transition to parenthoodThe correlation between earnings and fertility is driven by two main mechanisms: His and her current earnings may affect a couple's fertility decisions, and earnings may affect the propensity to enter and dissolve unions. This section first outlines a theoretical framework for the impact of earnings on couples' fertility decisions, taking rational choice theory (i.e. the microeconomic theory of fertility) as a starting point. I expand upon previous research by explicitly addressing rational choice theories of fertility timing. …