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Job Security and Fertility: Evidence from German Reunification A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Klemm, Marcus Working Paper Job Security and Fertility: Evidence from German Reunification Ruhr Economic Papers, No. 379 Provided in Cooperation with: RWI – Leibniz-Institut für Wirtschaftsforschung, Essen Suggested Citation: Klemm, Marcus (2012) : Job Security and Fertility: Evidence from German Reunification, Ruhr Economic Papers, No. 379, ISBN 978-3-86788-434-1, Rheinisch- Westfälisches Institut für Wirtschaftsforschung (RWI), Essen, http://dx.doi.org/10.4419/86788434 This Version is available at: http://hdl.handle.net/10419/67138 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu RUHR ECONOMIC PAPERS Marcus Klemm Job Security and Fertility: Evidence from German Reunifi cation #379 Imprint Ruhr Economic Papers Published by Ruhr-Universität Bochum (RUB), Department of Economics Universitätsstr. 150, 44801 Bochum, Germany Technische Universität Dortmund, Department of Economic and Social Sciences Vogelpothsweg 87, 44227 Dortmund, Germany Universität Duisburg-Essen, Department of Economics Universitätsstr. 12, 45117 Essen, Germany Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI) Hohenzollernstr. 1-3, 45128 Essen, Germany Editors Prof. Dr. Thomas K. Bauer RUB, Department of Economics, Empirical Economics Phone: +49 (0) 234/3 22 83 41, e-mail: [email protected] Prof. Dr. Wolfgang Leininger Technische Universität Dortmund, Department of Economic and Social Sciences Economics – Microeconomics Phone: +49 (0) 231/7 55-3297, email: [email protected] Prof. Dr. Volker Clausen University of Duisburg-Essen, Department of Economics International Economics Phone: +49 (0) 201/1 83-3655, e-mail: [email protected] Prof. Dr. Christoph M. Schmidt RWI, Phone: +49 (0) 201/81 49-227, e-mail: [email protected] Editorial Offi ce Joachim Schmidt RWI, Phone: +49 (0) 201/81 49-292, e-mail: [email protected] Ruhr Economic Papers #379 Responsible Editor: Christoph M. Schmidt All rights reserved. Bochum, Dortmund, Duisburg, Essen, Germany, 2012 ISSN 1864-4872 (online) – ISBN 978-3-86788-434-1 The working papers published in the Series constitute work in progress circulated to stimulate discussion and critical comments. Views expressed represent exclusively the authors’ own opinions and do not necessarily refl ect those of the editors. Ruhr Economic Papers #379 Marcus Klemm Job Security and Fertility: Evidence from German Reunifi cation Bibliografi sche Informationen der Deutschen Nationalbibliothek Die Deutsche Bibliothek verzeichnet diese Publikation in der deutschen National- bibliografi e; detaillierte bibliografi sche Daten sind im Internet über: http://dnb.d-nb.de abrufb ar. http://dx.doi.org/10.4419/86788434 ISSN 1864-4872 (online) ISBN 978-3-86788-434-1 Marcus Klemm1 Job Security and Fertility: Evidence from German Reunifi cation Abstract This paper uses the special occupational status of German civil servants in combination with the unforeseen event of German reunifi cation to study empirically the relationship between job security and fertility. The civil servant-status provides extreme job security as well as good possibilities to combine work and family lives. The fast introduction of the civil service system after reunifi cation represents an exogenous (re-)assignment of individual employment risks in Eastern Germany, and thus allows one to control for occupational self-selection. While no strong evidence for a link between job security and fertility emerges for men, the paper demonstrates a clear link between labor market and demographic outcomes for women, especially in Western Germany and most pronounced for higher educated females between age 25 and 40. This strong relationship is the result of occupational self-selection coupled with a civil servant- specifi c birth timing pattern and a small causal impact of job security on fertility. It shows that female civil servants are not primarily a selected group of very family oriented individuals, but rather both family as well as career oriented. JEL Classifi cation: D12, J13, J24 Keywords: Job security; fertility; occupational choice October 2012 1 German Council of Economic Experts, Ruhr Graduate School in Economics and Ruhr-Universität Bochum. – This paper solely refl ects the personal views of the author and not necessarily those of the German Council of Economic Experts. The paper is not an offi cial publication of the German Council of Economic Experts and does not necessarily refl ect the views of its members. I thank John P. Haisken-DeNew, Jan Kleibrink, Christoph M. Schmidt and seminar participants at the RWI Essen for helpful comments and suggestions. Financial support by the RGS Econ is gratefully acknowledged. In addition, I thank the Ruhr-University Research School funded by Germany‘s Excellence Initiative for further support [DFG GSC 98/1]. – All correspondence to Marcus Klemm, German Council of Economic Experts, c/o German Federal Statistical Offi ce, Gustav-Stresemann- Ring 11, 65189 Wiesbaden, Germany, E-Mail: [email protected]. 1 Introduction Labor market outcomes, demographic developments and their interrelations are of major social and economic importance. Since the 1970's, Germany like manyother developed countries has been experiencing low total fertilityrates that lie signicantlybelow the population replacement rate while female employment rates have been steadily increasing (Adsera 2005). Therefore, the (in)compatibilityof work and familylives, especiallyfor women, has become an area of major public concern, leading to several familypolicychanges since the 1990's and a large reform of the parental leave and benet system in 2007.1 Since the seminal contribution of Becker (1960), economists have been investigating fertility decisions, and in particular the importance of labor market outcomes for fertility. The other way around, the eects of having children on parents' economic decisions, including labor supply, have been subject to manystudies, too (see Browning 1992, for a survey). Since career and familychoices are closelyinterrelated, it is dicult to address each of them in isolation assuming either fertilityor labor market outcomes as exogenous. Relativelyfew studies have addressed family,labor supplyas well as educational or occupational choices jointly(Hotz and Miller 1988, Francesconi 2002, Sheran 2007, Adda et al. 2011). Besides the obvious opportunitycosts of having children in the form of foregone labor earnings and loss of labor market experience, economic uncertaintyrepresents a possible determinant of fertilityin its own right (Ranjan 1999, Kreyenfeld 2010, Bhaumik and Nugent 2010). In particular, economic uncertaintyis widelybelieved to have contributed to the large drop of birth rates in Eastern Germanyafter reunication (Witte and Wagner 1995, Conrad et al. 1996, Adler 1997, Lechner 2001, Kreyenfeld 2003, Huinink and Kreyenfeld 2005, Bhaumik and Nugent 2010). This paper contributes to the economic literature on the relationship between labor market outcomes and fertilitydecisions in three ways. First, it focuses on job securityas a possible causal determinant of fertilitybyexploiting the exogenous institutional changes brought about byGerman reunication in Eastern Germany. Second, these changes allow me to account for occupational self-selection which is verylikelyimportant when studyingcareer and familychoices. Third, I include women as well as men in the analysis. While most studies to date focus on women who face the more costlytrade-o between having children or a professional career, job security is likelyimportant for men too, especiallyif the male-breadwinner model applies as often argued for Western Germany(Tölke and Diewald 2003, Kreyenfeld2004, and references therein). The empirical analysis is based on the idea of Fuchs-Schündeln and Schündeln (2005): The special occupational status of German civil servants is combined with the natural experiment of German reunication to studythe relationship between job securityand fertility. The civil servant-status provides a veryhigh level of job securityas well as good possibilities to combine work and familylife. The analysisis based on the identication assumption that the fast intro- duction of the Western German civil service system after reunication constitutes an exogenous (re-)assignment of individual employment risks in Eastern Germany where occupational choice was largelyindependent of risk
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