Are storks striking for a contract renewal? Non-Technical Summary (Research summary)

The traditional literature on employment and fertility choices tends to explain them by referring to women’s characteristics and, if partners are included, it is generally in the study of women’s career outcomes. Other theories stress the importance of individuals’ preferences guiding their fertility and employment choices. However, this has not been empirically tested yet despite theoretical predictions that, beside constraints, unmeasured (and often unobservable) characteristics and values might be at play in both fertility and employment decisions. Nor has it been tested that certain unobserved inclinations, attitudes or values might jointly influence both employment and fertility choices, and that these influences –through an unobservable negotiation and adjustment process within couples- might affect both partners’ careers at once. The research reported here found that it was indeed important to take both individuals’ observed and unobserved characteristics and that of their partners into account. It also shows that unobservable traits simultaneously influence both couple’s decisions around fertility and each partner’s decisions around their employment. We also found that temporary employment contracts, for both men and women, do not directly hamper childbirth, but they are associated with a much higher risk of employment interruptions. We also find, both in Italy and the UK, that those households were women exit employment more easily tend also to be more likely to conceive a child. This is not the case for men. Their employment outcomes are seemingly unrelated to the couple’s fertility in either country. This result suggests the continued presence of a “traditional” strategy at the household level with regard to the combination of unpaid and paid activities for individuals, where fertility still seems to sit uneasily with lifelong female employment participation. Women are still responsible for a larger share of unpaid work and are those more prone to respond to changing demands on time, and women with more “traditional” preference for homemaking are still in a better position to afford childbearing and rearing. This pattern begins to be challenged in cohabiting couples in the UK, where cohabitations are increasing rapidly in proportion in recent decades. By contrast, no potential for immediate change is seen in the Italian case. A new and significant finding was that the form of partnership entered (cohabitation or marriage) had an effect on fertility (lower for cohabitants, in both countries) and on employment –in the UK only-, where cohabiting women tended to exit employment less and keep interruptions of a shorter duration (no effect on employment for women in Italy). As with regard to fertility and presence of children, men’s employment careers were both much less affected by their familial circumstances than those of women, while these latter also had less impact on their careers, again, compared to women. We found a decline over time in the stability of attachment to the labour market for all individuals (younger birth cohorts experienced more employment interruptions), but this was offset by increased entry into employment by women. But whereas in Italy this was paralleled by a decrease in fertility across birth cohorts, in the UK fertility did not decrease correspondingly. Part-time employment, with its positive effect on childbirth, might have been one of the keys in sustaining British fertility. Working in the public sector, with its more ‘family friendly’ working hours and higher employment guarantees, significantly reduced the risk of employment interruptions and fostered fertility in both countries. Since part-time working hours did not seem to protect women from exiting employment, a reduced and more flexible working schedule might better be a strategy pursued to sustain fertility and re-entry into employment than to prevent career interruptions. Finally, we found that some unobserved traits, in both countries, affect a polarisation of households’ behaviour in the face of men’s employment exits: in households where men were more likely to exit employment, women tended to either exit more themselves or to enter more. This hints at two types of behaviour tackling labour market instability that might be implemented by different household types. First, a ‘compensation’ route, whereby women’s labour force participation was used to supplement household income in times of need, and thus protect against the economic consequences of employment loss and shield households from the risk of falling into poverty. Second, a ‘low-profile’ route, where both couple’s members were more likely to suffer employment interruptions. This second type of household behaviour might be triggered by homogamy (where both partners might have weaker credentials or capacity to spend in the labour market or else share a more traditional view on breadwinning arrangements) or by a perverse incentive structure entailed in the welfare benefits system in case of unemployment of the main income provider, which might make women’s often lower earning capacity (especially in part-time jobs) not worth being pursued if benefits entitlements are reduced or lost. Both explanations have found support in the literature. This is an important finding at a policy level, particularly because the analyses show that low education is also associated with a higher risk to exit employment, a longer time required to (re-)enter it and to higher fertility in both countries. This means that, in this second case, those households, and the children living in them, are more exposed to the risk of falling into a poverty trap.