France: Job insecurity reduces fertility especially for the well-off
France: Job insecurity reduces fertility especially for the well-off
A 2020 study (A Natural Experiment on Job Insecurity and Fertility in France by Andrew E. Clark & Anthony Lepinteur) finds that a 1999 French tax reform that increased layoff risks for younger workers led to a sizable decline in their probability of having a new child, with the strongest effects seen among high-wage and more-educated individuals.
Why it matters: France has seen its fertility rate fall from 2.0 in the mid-1990s to 1.8 today, part of a broader trend of low fertility across developed countries. The findings suggest job insecurity could be important in dampening birth rates, especially among higher-earning households.
By the numbers
The 1999 layoff-tax hike reduced the probability of affected under-50 workers in larger firms having a new child by 3.9 percentage points compared to under-50 workers in smaller firms who were unaffected. This represents a 57% decline relative to the pre-reform average birth probability of 0.07.
The reform also reduced perceived job security (measured on a 1-6 scale) by 0.19 points, about a sixth of a standard deviation.
Fertility effects were concentrated among workers with above-median wages and post-secondary education. No significant differences were seen by gender or age.
After the reform, existing parents were less likely to have an additional child, while the likelihood of initial childbearing did not change. Families with 2+ children beforehand saw the largest declines.
Robustness checks show that fertility results are not driven by potentially confounding factors like the 35-hour workweek policy, macroeconomic trends affecting neighboring countries, estimation methods, or sample composition.
The effects reflect fewer children born overall rather than just a temporary delay in fertility, at least over the 1999-2001 horizon examined.
The big picture: The findings are consistent with economic theory suggesting greater uncertainty leads people to delay or forego irreversible, costly investments like childbearing. Prior research has found job insecurity also reduces health, subjective well-being, and political moderation.
Between the lines: The stronger effects for high-earners and the college-educated suggest human capital and careers factor heavily into fertility decisions for these groups. The authors say this is consistent with a "negative selection into parenthood" during periods of economic uncertainty.
How they did it
The researchers used a difference-in-differences design, exploiting a sharp increase in the French "Delalande tax" in 1999, which made it costlier for firms with over 50 employees to lay off workers aged 50+. This reduced job security for under-50 workers in those firms relative to their peers in smaller firms who were unaffected. The analysis used 1994-2001 individual panel data from the French version of the European Household Community Panel.
What they're saying
While workforce flexibility has merits, the researchers caution that "smaller families may be the price to pay" unless policies like generous unemployment benefits, reemployment assistance, and other social insurance can mitigate the downside of job loss.
The bottom line: Job protections don't just affect employment - they can have profound spillover effects on workers' family and fertility choices. Policymakers must weigh any intended labor market efficiency gains against unintended demographic consequences like lower birth rates and smaller family sizes.