Impact of foreign domestic workers on the fertility decision of households: evidence from Hong Kong

Nobuyuki Nakamura,Aya Suzuki

doi:10.1017/dem.2021.33

Abstract

AbstractA potential solution to low fertility is the employment of foreign domestic workers (FDWs), who substitute child-rearing and housework duties, thus reducing child-rearing costs. Recent studies argue that the flow of low-skilled foreign workers into the childcare sector influences fertility choice. However, these studies mainly use the availability of FDWs in the local area as the causal inference and focus on Western countries, making it difficult to identify individual direct effects or generalize the findings to other countries. To bridge this research gap and examine the impacts, this study uses household data from the Hong Kong census. Employing ordinary least squares, the inverse probability weighted regression adjustment, and the instrumental variable approach, we find that households that employ live-in FDWs give birth to more children. Moreover, the heterogeneous analysis reveals that women's greater proportional contribution to household income has a positive impact on households' fertility response after employing the FDWs.

Highlights

Total fertility rate in most developed countries, including the United States, Japan, Korea, and China, is lower than 2.10, called the replacement-level fertility [World Bank (2019)]
Columns 5 and 6 show the results of the impacts of employing the foreign domestic workers (FDWs) on having the multiple children, and we find that the probability of having more than two children increases in the FDWs-employed households
We explore the impact of employing FDWs in Hong Kong on fertility outcomes using the micro data from the census

Summary

Introduction

Total fertility rate in most developed countries, including the United States, Japan, Korea, and China, is lower than 2.10, called the replacement-level fertility [World Bank (2019)] The causes of this low fertility in developed countries include female participation in the labor market, high costs of child-rearing, and conflicts of time allocation between couples [Balbo et al (2013)]. Recent studies have shown that the flow of FDWs into the childcare outsourcing industry influences fertility behavior in households [Hazan and Zoabi (2015); Furtado (2016); Bar et al (2018)] These studies suggest that hiring FDWs serves as an incentive for highly educated or high-earning women to increase their number of births without sacrificing their careers by lowering child-rearing costs based on the “marketization hypothesis” [Freeman and Schettkat (2005)]

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Conclusion