Female labor force participation and total fertility rates in the OECD: New evidence from panel cointegration and Granger causality testing

Abstract

This article examines the relationship between the female labor force participation rate and the total fertility rate for 28 OECD countries using panel unit root, panel cointegration, Granger causality and long-run structural estimation. The article finds that there is either unidirectional long-run Granger causality running from female labor force participation to the total fertility rate or bi-directional Granger causality between the two variables depending on how the female labor force participation rate is measured and the time period. In each case it is found that there is an inverse relationship between the female labor force participation rate and total fertility rate. This result supports the role incompatibility hypothesis that states there is a negative relationship between these variables because of the strain of performing the roles of both employee and mother.