Family Policies and Fertility - Examining the Link between Family Policy Institutions and Fertility Rates in 33 Countries 1995-2010
Corresponding author:
PhD student Katharina Wesolowski
Sociology/Baltic and East European Graduate School (BEEGS)
Södertörn University
SE-141 89 Huddinge
Sweden
E-mail:
Telephone: +46 8 608 50 95
Associate Professor of Sociology Tommy Ferrarini
Swedish Institute for Social Research
Stockholm University
SE-106 91 Stockholm
Sweden
Abstract
In what ways are family policies related to fertility? Previous studies of OECD countries have arrived at mixed results when analysing the effects of family policy expenditures or formal benefit rates. This study draws on new institutional family policy data from a wider set of 33 countries in a multidimensional analysis of the link between family policy institutions and fertility for the years 1995 to 2010. Pooled time-series regressions show that more extensive gender-egalitarian family policies, i.e. earner-carer support, are linked to higher fertility, while policies supporting more traditional family patterns as well as the degree of economic development show no statistically significant effects. Analyses of the interaction between earner-carer support and female labour force participation indicate that the impact of introducing more gender-egalitarian policies is stronger in countries with lower levels of female labour force participation. Regressions with differenced data sustain ideas of earner-carer support being linked to total fertility increase.
Keywords: fertility, family policies, female labour force participation, gender-egalitarian, gender-traditional
Introduction
In the last few decades, total fertility rates have remained below the replacement rate of 2.1 children per woman of fertile age in most affluent countries, causing debate among policymakers, as well as scholars, about the best ways to reverse, or at least slow down fertility decline. Family policy legislation has entered the spotlight here. In research on welfare states and family change a much-debated issue concerns the degree to which family policies impact on fertility. Several studies indicate that some family policies may result in increases in fertility rates. However, the empirical evidence has at times been inconclusive, to some extent because of the different ways of conceptualising and measuring the contents of family policies (see Gauthier 2007).
Many previous studies of fertility outcomes have used family policy expenditures or the formal pre-tax benefit levels given by family policies as explanatory factors. Although such approaches have contributed important empirical insights, they are often insufficiently detailed and fail to differentiate between the theoretically central institutional characteristics of policies. Here, the institutional, or social-rights approach, built on the legislative structures of social-policy transfers is proposed as a more precise method to analyse the causes and consequences of welfare-state organisation (see Korpi and Palme 1998). When this approach was extended to family policy analysis the need to analyse policy in a multidimensional framework was highlighted (see Ferrarini 2003; Korpi 2000; Pettit and Hook 2009; Sainsbury 1999). Korpi´s (2000) approach, for example, differentiates the gender-egalitarian aspects of family policy from the features supporting a more traditional gender-division of paid and unpaid work. This approach allows for an analysis of whether different types of family policy orientations affect childbearing decisions differently. This is relevant, particularly against the background of the argument that family policies that help both partners to combine work and family life, i.e. more gender-egalitarian family policies, are the best way to raise fertility levels in low-fertility countries (e.g. McDonald 2006).
Family policies can be linked to childbearing through several pathways. One might expect that the policies would impact on childbearing behaviour directly by increasing the size of household budgets, thus decreasing the relative size of the direct costs of children. However, family policies are also likely to have indirect effects on behaviour. Thus, they could reduce the opportunity costs of childbearing by making the combination of paid work and family life easier (see Gauthier and Hatzius 1997). In this context, gender-egalitarian and traditional family policies are likely to have divergent effects on women’s employment. Gender-egalitarian family policies, assisting with the combination of paid work and care, are particularly likely to increase female labour force participation both before and after childbirth (see Ferrarini 2003; Gornick and Meyers 2008; Korpi 2000).
This paper aims to analyse the link between different family policy institutions and fertility rates 1995-2010 in 33 countries, including both longstanding and newer members of the EU as well as other post-communist countries. The study thus widens the analyses of recent family policy development and fertility to also include post-communist countries in Eastern Europe, where fertility decline has often been substantial. More precisely, the analyses aim to investigate whether and how gender-egalitarian or traditional family policies are connected to fertility rates. This is done by employing the multidimensional approach to family policy analysis originally developed by Korpi (2000).
The following section of this article discusses results of previous studies analysing the links between family policy and fertility. The third section elaborates upon the theoretical underpinnings of the family policy dimensions employed in the analysis. The fourth section is devoted to a discussion of data and variables used, while the fifth section describes estimation methods. The sixth section presents empirical evidence, and the final section discusses the main results.
Family Policy and Fertility – Previous Research
In what ways can family policy be expected to influence fertility in industrialised countries? There are several explanations for the long-term fertility decrease. A general rise in income and an increase in women’s labour force participation and education were for long assumed to introduce a trade-off between the number of children and the investment in the child’s education. Moreover, women’s increasing educational attainment and earnings implied that they would be more prone to choose paid work over childbearing (Barro and Becker 1989; Blossfeld 1995). However, the links on the country level between economic development and fertility as well as female employment and fertility appear to have turned from a clearly negative correlation in the 1970s and the 1980s to a positive one during the most recent decades. The main reason why female employment and economic development are now positively related to fertility on the country level has been sought in the proposition that family policies can actively assist with one’s ability to combine paid work and family life (see Ahn and Mira 2002; d´Addio and d´Ercole 2005).
It has been pointed out that countries where family policies are specifically designed to support the reconciliation of paid work and family life are the ones that have managed best to counter the fertility decline (Castles 2004). Moreover, economic and social development may well be a reason for the “fertility rebound” observed in rich countries. This can be seen in the results of Myrskylä et al. (2009) showing that the rank correlation between the Human Development Index (HDI) and fertility rates turned into a positive one in those countries where the HDI increased above 0.9 between 1975 and 2005.
In this context, Luci and Thévenon (2010) argue that the female employment may be the key factor behind the fertility rebound in rich countries. In an analysis of 30 OECD countries for the period 1960-2007 they identified female labour market participation as a central factor behind the increase in fertility rates in some countries. The proposed mechanism is that economic development increases both the possibility for women to engage in paid work and the possibility for parents to reconcile paid work and family life (Luci and Thévenon 2010).
Returning to the discussion of family policies, evidence from comparative macro-level analyses supports the idea that they may influence fertility (Castles 2003; Ferrarini 2003; Gauthier and Hatzius 1997; Rovny 2011; Ruhm and Teague 1995; Winegarden and Bracy 1995). Gauthier and Hatzius (1997), for example, find a positive relationship between family allowances on fertility rates in their study on 22 industrialised countries 1970-1990, even though the magnitude of the correlation is not high.
Ferrarini (2003) found a positive correlation of both gender-egalitarian and gender-traditional family policies with fertility rates when analysing the impact of family policies on fertility rates in 18 OECD countries in the period 1970-1995. Another one of his findings is that gender-egalitarian family policies were connected to higher female labour force participation, while gender-traditional family policies were connected to lower female labour force participation. This is interpreted to indicate that gender-egalitarian family policies lower the opportunity costs for women to be in paid employment, in contrast to traditional family policies that increase these opportunity costs (Ferrarini 2003).
In a review of previous findings, Gauthier (2007) comes to the conclusion that there is evidence supporting the argument that family policies actually may increase fertility even though the effects do not appear to be large. However, previous empirical findings have at times been contradictory, partly due to lack of available data on different types of public family policies and other measurement and modelling issues. McDonald (2006) argues that policies facilitating the reconciliation of paid work and child-rearing would be the most viable way to raise fertility, and also maintains that already small impacts could raise the total fertility rate (TFR) above the lowest-low fertility levels.
A recent study by Luci-Greulich and Thévenon (2013) on family policy in 18 OECD countries in the period 1982-2007 demonstrates that family policies may increase fertility rates. Different family policy measures were analysed and the results indicate that each policy instrument has a positive effect. Spending on cash benefits, on parental leave benefits, on maternity grants related to childbirth, and enrolment in childcare for children below the age of three were all positively correlated with fertility rates. An overall conclusion drawn by the authors is that a combination of different family policies facilitates childbirth although their influence differs depending on the family policy context in each country. The authors, however, do not go into detail regarding which particular type of combination would be the most favourable (Luci-Greulich and Thévenon 2013).
The study of Luci-Greulich and Thévenon (2013) is one of the first studies to include data on family policy that stretches into the most recent decade. However, their study does not cover Eastern European countries. Several researchers have discussed the tendency of family policies to change towards a more familialist or male-breadwinner model in post-communist countries (Ciccia and Verloo 2012; Saxonberg and Szelewa 2007). Examples of post-communist countries currently applying a male-breadwinner model given by Ciccia and Verloo (2012) are the Czech Republic, Estonia, Hungary, Latvia, Poland, and Slovakia. In her analysis of 13 post-communist countries, Rostgaard (2004) also comes to the conclusion that family policies have developed in a more gender-traditional direction in several of these countries, making the reconciliation of work and child-rearing harder, especially for women.
However, the development of family policies in Eastern Europe has also been shown to be quite diverse. It is not necessarily oriented towards a refamilialisation, but in some instances also emphasises more gender equality (Aidukaite 2006; Billingsley and Ferrarini 2014). For example, Slovenia´s family policy has in several studies been shown to have clear gender-egalitarian features (Billingsley and Ferrarini 2014; Ciccia and Verloo 2012).
Much of the discussion about recent fertility decline in Europe points to the potential role that can be played by family policy. Against the background of the above, it seems urgent to expand the analysis of the link between family policies and fertility to post-communist countries. Do results from longstanding welfare states hold when the systematic comparative analysis is extended to include also the post-communist countries?
As discussed above, family policies may in several ways impact on fertility as well as on the potentially important intermediate factor of female employment. One obvious direct effect of family policy transfers is that they increase the size of the household budget and thus make it easier to meet the direct costs of children (costs for household goods, education, housing etc.). Here, it is important to note that family policy legislation also may have indirect effects on childbearing decisions. On the one hand, they could support paid work (and care) of both parents and thus lower the opportunity costs for giving birth, especially for women. On the other hand, they could sustain gendered divisions of labour, where women’s main responsibility for care work is traded against less involvement in paid work (Korpi 2000; Sainsbury 1996).
A Multidimensional Perspective on Family Policy Institutions
Family policy legislation became central in comparative welfare state analysis when gender perspectives challenged the dominating class-based or structural-economic explanations to differences between welfare states (Orloff 2009). Feminist critique in particular came to target Esping-Andersen’s (1990) typology of the “three worlds of welfare capitalism” for neglecting women’s unpaid work (O´Connor et al. 1999; Orloff 1993). One response was to develop new gender-regime typologies, based on the structure of family policies as well as their gender-related outcomes (Crompton 1998; Lewis 1992; Pfau-Effinger 1998; Siaroff 1994). These efforts contributed considerably to welfare-state analyses by highlighting the gender aspects of welfare states. However, they also shared some shortcomings with other regime typologies concerning causal analysis. One reason for this is that regime typologies often mix welfare institutions and their effects in their very basis, restricting their explanatory potential concerning the same effects (Korpi and Palme 1998).
Basing the analysis solely on institutional family policy indicators was an approach developed in order to improve the explanatory potential in comparative empirical analyses. While some of the early studies used family policy indicators to evaluate the “family-friendliness” of welfare states along a single scale, other researchers pointed to the multidimensional structures of family policy institutions (Korpi 2000; Sainsbury 1996). However, family policies were not necessarily “women-friendly” but could support different gender divisions of labour. Korpi (2000) used a multidimensional approach to distinguish between gender-egalitarian policies that support gender equality in paid and unpaid work, on the one hand, and traditional policies supporting marked gender divisions of labour on the other. Later studies have fruitfully used this approach in empirical analyses of gender inequalities of paid and unpaid work, as well as childbearing (Billingsley and Ferrarini 2014; Ferrarini 2006).
Korpi et al. (2013) later added a “dual-carer” dimension that also takes into account the degree to which fathers are supported in their care role. However, empirically speaking, the dual-earner and dual-carer dimensions appear to have been developed in tandem and their occurrence is highly positively correlated, while both of them show a negative relationship with the traditional-family support dimension (Korpi et al. 2013). Therefore, dual-carer and dual-earner support forms can be combined analytically into a so-called “earner-carer” support dimension.
As countries´ family policies often contain varying amounts of both earner-carer and traditional-family support forms, the institutional approach allows them to vary along both dimensions simultaneously. It also permits the countries to have contradictory elements in their family policies – for example, both gender-egalitarian and gender-traditional policies can be highly developed simultaneously. Such policy constellations have often been shaped by class and gender interest formation, changing political power relations, and policy inertia producing a particular layering of different family policies with contradictory elements (Ferrarini 2006). The use of family policy dimensions that are allowed to vary in degree also facilitates an analysis of policy change that cannot be captured by only attaching static regime labels to countries.
Data
The development of institutional social-rights data based on legislative structures emanated from the challenge posed by well-known validity problems associated with expenditure data in welfare-state analyses (see Bolzendahl 2011; Esping-Andersen 1990; Gilbert 2009; Goodin et al. 1999; Kangas and Palme 2007). Although several recent studies using expenditures have provided important empirical results (see Kalwij 2010; Luci and Thévenon 2010), data on expenditures still often have insufficient detail to separate theoretically central institutional characteristics of policies.[1] Institutional social-rights data are also less affected than expenditure data by the outcomes of the policies that are subject to study.[2] Moreover, they are less sensitive to changes in the gross domestic product (GDP), which is used as the denominator when constructing expenditure-based indicators.
Institutional analyses of family policy are not entirely new to the study of fertility outcomes. Central studies have for example used legislated replacement rates in per cent[3](see Castles 2003; Gauthier and Hatzius 1997). However, there are some major drawbacks to the use of formally legislated rates. First, as taxation of benefits is not considered, bias is introduced in the comparison between taxable and non-taxable benefits. Second, legislated benefit ceilings are not taken into account. This means that benefits with seemingly high formal replacement rates may have factual replacement levels that are considerably lower because the earnings-ceilings of benefits are often set at a fairly low income.
In order to address the above-mentioned problems, the core independent variables used in this study are the net replacement rates of family benefits, which express the size of benefits after income taxation as proportion of an average production worker’s after-tax wage. Data for the countries are mainly taken from the Social Citizenship Indicator Program (SCIP) and the Social Policy Indicator database (SPIN), developed at Stockholm University and covering 33 countries every fifth year between 1995 and 2010.[4] This replacement-rate data is based on the calculation of entitlements for a model family according to the rules stated in national legislation. The benefits are the annual after-tax replacement rates for a family with two adults (one working full-time and one on leave) and two children (of which one is an infant) expressed as a percentage of an average production worker´s net wage.