Sessione 4 Sottosessione 2

Economic Uncertainty and Fertility in Italy: Which Uncertainty Matters?

(A. Gatta, F. Mattioli, L. Mencarini e D. Vignoli)

Abstract

The role of economic uncertainty as a determinant of childbearing intentions has been so far explored in the literature through a limited set of constructs, failing to recognize the multidimensionality of this concept. Previous attempts to operationalize economic uncertainty rely on the use of the dichotomy employed/unemployed, downplaying that individuals might differ with respect to how they react and take decisions in uncertain economic situations. In addition, previous theoretical literature highlighted the presence of a potentially non-linear path dependency between fertility and economic uncertainty (Bhaumik and Nugent, 2006). This hypothesis has never been tested empirically in the socio-demographic literature and, if proved, it could reconcile contrasting empirical findings.

Our work addresses these research gaps, proceeding in four steps. First, we propose an empirical operationalization of different aspects of perceived economic uncertainty and test their relevance for predicting fertility intentions, net of the actual employment status and characteristics. Second, we test whether the link between perceived economic uncertainty and fertility planning holds net of person-specific risk aversion. Third, we explore the possibility the labor market context matters in moderating the effects of economic uncertainty on fertility plans. To this end, we introduce a measure of the degree of gender equality in the local labor market in the equation (i.e. the Gender Gap in Employment). Finally, while previous research has, at best, tested a monotonically positive or negative relationship between economic uncertainty and fertility, this study will explicitly consider the possibility of a non-linear, and even non-monotonous, relation.
We rely on the Italian Trustlab 2017 (for details, see https://ifamid.com/trustlab-italy/), a survey providing a detailed collection of information on a variety of measures of perceived economic uncertainty and risk attitudes. Trustlab is a project launched by OECD in 2016 aimed at creating the first internationally comparable and nationally representative database on trust and social preferences using both survey and experimental approaches. The baseline sample is nationally representative and consists of 1,016 respondents, supplemented by a booster sample of 442 women in childbearing age (18 to 45 years old). Our study restricts the attention to the subsample of individuals in couple and cohabiting with the partner, whose fertility intentions can be linked more reliably to subsequent fertility behavior.
We exploit Trustlab’s built-in module on self-assessed economic uncertainty. Four items are used to operationalize the four dimensions of economic uncertainty identified in the background. The questions used are the following: 1) Financial Security: “When it comes to the financial situation of your household, what are your expectations for the twelve months to come, will the next twelve months be better, worse, or the same?”; 2) Job Keeping: “How likely do you think it is that you will still have a job in 6 months (if you have one now)?”; 3) Job Seeking: “If you were to lose your job, how likely is it that you would find a job with a similar salary within six months?”; 4) Social Mobility: “Some people say there is not much opportunity to get ahead today for the average person. Others say anyone who works hard can climb up the ladder. Which one comes closer to the way you feel about this?”.

Multivariate analysis suggests that the four identified dimensions of economic uncertainty are related but do not affect fertility intentions in the same way. The observed relationship is robust to the inclusion of markers of individual-level heterogeneity, such as person-specific risk aversion and life satisfaction. Introducing the level of gender equality in the labor market (the ratio between female and male labour force participation at the provincial level) reveals the existence of a work-family conflict for women: the perception of having a stable job seems to affect positively women childbearing intentions only for those women living in provinces with higher female labor force participation relative to men.

Finally, to detect the possibility of a non-linear effect of perceived economic uncertainty on fertility intentions, we tested: (i) a squared variant of our four indicators and (ii) split them into levels (`high’, `medium’ and `low’). Our preliminary results do not support the idea of a non-linear relationship.
Our results represent a relevant contribution to the literature on the relationship between fertility and economic uncertainty, providing support to the idea that economic uncertainty is a multidimensional concept and that different aspects matter for the formation of fertility intentions, even after considering individual risk aversion.