Total Fertility Rates and Female Labour Force Participation in Great Britain and Italy: Estimation of a Reduced Form Model Using Regional Panel Data∗

In this work we explore the hypothesis that unemployment may be responsible for recent trends in fertility and participation rates in some European countries. We estimate a reduced form model of fertility and female participation using regional panel data, considering 10 regional aggregates for Great Britain over the period 1983-1997 and 14 regional aggregates for Italy over the period 1983-1996. Within each country the model is specified for women in their entire fertile age span and for three different age specific groups and is estimated using fixed-effects in order to control for region-specific unobservable characteristics, such as the cost and the availability of child-care. Our results show that unemployment exerts a significant and negative effect on both fertility and female participation. We calculate that the total rate of unemployment contributed to almost a quarter of the actual decline in fertility rates in Italy.