The effects of unemployment on fertility

We analyse the effects of unemployment on the likelihood of having a first and second birth in Denmark. The existing studies on this topic have generated contradictory results, and have made a weak case for the exogeneity of unemployment to fertility. We suggest that firm closures constitute an exogenous source of unemployment, and adopt firm closures as an instrument for estimating individuals’ fertility responses. Using a life-course approach, we exploit unique administrative data from Denmark that include all Danish residents born in 1966 and followed between 1982 and 2006. The data contain monthly information about each individual's employment status, type of employer, relationship status and partner's characteristics; as well as very detailed fertility information, including on stillbirths and registered miscarriages. We find that unemployment has a positive effect on motherhood transitions and a negative effect on fatherhood transitions, although the latter is not robust to the inclusion of controls. We find no significant effect of unemployment on second births.