The impact of a negative labor demand shock on fertility – Evidence from the fall of the Berlin Wall

Abstract

How does a negative labor demand shock impact individual-level fertility? I analyze this question in the context of the East German fertility decline after the fall of the Berlin Wall in 1989. Exploiting differential pressure for restructuring across industries, I find that throughout the 1990s, women more severely impacted by the demand shock had more children on average than their counterparts who were less severely impacted. I argue that in uncertain economic circumstances, women with relatively more favorable labor market outcomes postpone childbearing in order not to put their labor market situations at further risk. This mechanism is relevant for all qualification groups, including high-skilled women. There is some evidence for an impact on completed fertility.

Temporary Overpessimism: Job Loss Expectations Following a Large Negative Employment Shock

“…14 Figure 8 shows the development of the employment shares of several industries in East Germany over time. Our data mirrors the findings in Liepmann (2018). The employment share in services increased from 27 percent in 1991 to 42 percent in 1999 whereas it decreased for manufacturing, agriculture, energy and mining from 38 percent to 24 percent (21 percent in 1996).…”

“…Liepmann (2018) shows that industry affiliation and consequently employment expectation had an impact on the fertility of East German women.…”

The Legacy of State Socialism on Attitudes toward Immigration

“…I undertake three different approaches in addressing this issue. First, I compute a measure of how likely it is that East Germans will lose their job after reunification based on differences in industry employment according to Liepmann (2018). Second, I measure actual unemployment experience.…”

The Research Data Centre of the German Federal Employment Agency at the Institute for Employment Research (RDC-IAB)

“…The following two are the latest publications based on linked data (see Table 1 for more details on the datasets men-tioned here): Liepmann [42] used BASiD to analyse the impact of a negative labour demand shock on fertility in East Germany after the fall of the Berlin Wall in 1989. While birth rates in West Germany remained relatively stable after 1989, the fertility in East Germany declined.…”