Peer Effects on Fertility Decision Making

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DESCRIPTION (provided by applicant): This research will investigate whether and how working women's fertility decisions are affected by the fertility of their co-workers at the same establishments. The mechanism for peer effects may be social in nature, as in group norms, or economic, such as professional competition. Understanding fertility decisions for working women is of heightened policy importance, because sub-replacement fertility rates in much of the developed world undermine the sustainability of pension and redistribution systems, and may limit long-run economic growth. Greater female labor market participation may offset the declining male workforce, but may itself lead to lower fertility rates. The presence of workplace spillovers in the form of peer effects in fertility makes the distribution of where women work an important consideration, beyond simply if they work, in predicting fertility. Furthermore, fertility spillovers have the potential to seriously amplify or dampen behavioral response to policy changes. We will use high-quality, detailed, register-based data on the population of Denmark that allows us to link individuals to their employers and family members. Our methodological innovation is to model social interactions as strategic interactions in a game theoretic framework, upon which we will develop an empirical approach that simultaneously considers the fertility choices of all agents at the same workplace and explicitly accommodates the possibility of multiple equilibria. We will control for a range of personal and workplace characteristics, and allow for the possibility that common unobservable random shocks affect the fertility of all women at an establishment. We will also use co-workers' siblings' fertility as instrumental variables, under the assumption that women may be directly affected by the fertility of their sisters, but not by the fertility of their co-workers' sisters. The empirical approach will explicitly incorporate heterogeneous effects, and consider if women are more or less responsive to the fertility choices of others who share their educational, career and fertility backgrounds. Our novel empirical approach can be applied broadly to the study of social interactions with strategic elements. PUBLIC HEALTH RELEVANCE: The proposed research will contribute to the public health goals of the Demographic and Behavioral Sciences Branch of NICHD by exploring the roles of social and economic peer influences on fertility. The empirical approach developed in this project will also have future applications to study other health behaviors that involve social interactions and strategic considerations.