Fertility Effects of Labor Market Conditions at Graduation

• Published date: 01 July 2023
• Author: Yue Yin,Ye Jiang
• Date: 01 July 2023
• DOI: http://doi.org/10.1111/cwe.12494

©2023 Institute of World Economics and Politics, Chinese Academy of Social Sciences

China & World Economy / 120–152, Vol. 31, No. 4, 2023

120

Fertility Ef‌f ects of Labor Market Conditions

at Graduation

Yue Yin, Ye Jiang*

Abstract

This study examines how individuals’ fertility outcomes were af‌f ected by the labor market

conditions they experienced at graduation. Using data from the Chinese General Social

Survey, it f‌i nds that poor labor market conditions at graduation delayed individuals’ entry

into parenthood. Higher unemployment rates at graduation reduced the probability of

having at least one child in the survey year for both men and women. The negative fertility

ef‌f ects generally followed a U-shape, reached the maximum around average childbearing

ages, and faded out within 15 years after graduation. Low-skilled workers mainly

contribute to the negative fertility ef‌f ects observed in the whole sample. Employment and

marital outcomes are also analyzed as potential mechanisms. Estimation results indicate

that individuals who experienced poor labor market conditions at graduation delayed

marriage and the birth of the first child due to a lower probability of being employed,

reduced working hours, and adverse income shocks. The negative long-term fertility ef‌f ects

should be brought to policymakers’ attention, especially when China’s low fertility issue

worsens. Policymakers are expected to create more favorable employment conditions for

labor market entrants to encourage fertility and expand the future working-age population.

Keywords: fertility, graduation, labor market conditions, unemployment

JEL codes: J11, J13, J16

I. Introduction

The significant impacts of contemporaneous economic performance on people’s

marriage and fertility outcomes have been tested extensively (e.g., Adsera, 2011;

Hellerstein and Morrill, 2011; Kondo, 2015). Many researchers found that individuals

tend to delay marriage and fertility plans during economic downturns. Potential

mechanisms include employment uncertainty, lower wage income, rising participation

in education, and personal anxiety (Sobotka et al., 2011). Instead of reaffirming the

fertility ef‌f ects of current economic conditions, this study analyzed how people’s fertility

*Yue Yin, Lecturer, School of Economics, University of Bristol, United Kingdom. Email: yue.yin@bristol.ac.uk;

Ye Jiang (corresponding author), Assistant Professor, National School of Agricultural Institution and

Development, South China Agricultural University, China. Email: yjiang25@scau.edu.cn.

©2023 Institute of World Economics and Politics, Chinese Academy of Social Sciences

Fertility and Labor Market Entry Conditions 121

outcomes were af‌f ected by labor market conditions at their graduation time from a long-

term perspective.

Figure 1. Dif‌f erent labor market conditions at graduation

Source: This f‌i gure was drawn by the authors.

This study’s research question closely connects with previous literature that

discussed the labor market outcomes experienced by those who graduated during

a recession. Workers who graduated during a recession were found to suffer from

persistent negative career effects, including worse job opportunities and lower wage

incomes (e.g., Genda et al., 2010; Kahn, 2010; Hershbein, 2012). As illustrated in

Figure 1, an individual’s life course is assumed to follow a standard “Chinese timeline”:

he or she starts education at age 6, completes the highest degree, enters the labor

market, marries, and has the f‌i rst child. Like persistent negative career ef‌f ects, if poor

labor market conditions at graduation adversely impact individuals’ future marriage and

fertility outcomes, the graduation year would be a turning point leading to distinct life

courses. “Unlucky” graduates who start their career when labor market conditions are

poor (depicted by the solid path) tend to delay their entry into marriage and parenthood

in comparison with those who take of‌f during good times (depicted by the dashed path).

Existing empirical evidence was built on data from Japan, Germany, and the US.

Hashimoto and Kondo (2012) found that weak economic conditions at labor market

entry exerted a negative fertility effect on low-skilled women (high-school educated)

but a positive impact on high-skilled women (college educated) in Japan. Hofmann and

Hohmeyer (2016) identif‌i ed the impact of the business cycle at college graduation on

Yue Yin, Ye Jiang / 120–152, Vol. 31, No. 4, 2023

©2023 Institute of World Economics and Politics, Chinese Academy of Social Sciences

122

fertility using German data and discovered that an economic downturn at graduation

signif‌i cantly speeded up f‌i rst childbirth among female graduates. Maclean et al. (2016)

detected that American men who left school when the state unemployment rate was high

were less likely to be married and have children at age 45, but women were more likely

to have children.

The evidence so far is mixed and primarily based on developed countries. This study

contributes to the previous literature with the latest empirical f‌i ndings from China. As

the world’s largest developing country, China exhibits systematic dif‌f erences in political

institutions and economic performance from most developed countries. Meanwhile,

China’s birth rate has been declining sharply under the strict one-child policy since the

1980s. The ongoing low fertility and the aging population raise severe concerns about

a shrinking workforce (Du and Yang, 2014). The current pro-natalist policies issued

by the Chinese government, including abolishing the one-child policy in 2015, have

not spurred a baby boom as expected. In 2021, China’s birth rate decreased to 7.52 per

thousand, a record low since 1949 when the People’s Republic of China was founded.1

The net increase in population was only 480,000, an alarming decrease of 1.56 million

from 2020.

This low fertility issue has triggered heated discussion regarding Chinese households’

fertility decisions (e.g., Yin et al., 2014). From the traditional Chinese perspective,

childbirth is essential for adults to achieve family happiness and show f‌i lial obedience.

Many researchers attribute low fertility to contemporaneous factors, such as women’s

conf‌l icting commitments to work and family (Fang et al., 2013), the lack of formal public

childcare services (Yang, 2020), and surging property prices (Pan and Xu, 2012).

This study takes a long-term perspective and relates individuals’ fertility outcomes

to the labor market conditions that they experienced at the time of graduation. It f‌i nds

that poor labor market conditions at graduation delayed f‌i rst childbirth for both men and

women. The negative fertility ef‌f ects emerged immediately after graduation, appeared to

be strongest when individuals were around the average childbearing age, and faded out

in the following 15 years after graduation.

In addition to fertility outcomes, individuals’ employment and marital outcomes are

examined as potential mechanisms behind the negative fertility ef‌f ects. Low-skilled workers

mainly contribute to the negative fertility ef‌f ects observed in the whole sample. They tend

to decrease labor supply and suf‌f er from adverse income shocks if they experience poor

conditions at labor market entry. They are also more likely to have been single and less

likely to be married if they graduated when the unemployment rate was high.

1Sourced from NBS: http://www.stats.gov.cn/english/.