The effect of the business cycle at college graduation on fertility

Katrin Hohmeyer, Institute for Employment Research (IAB)
Barbara Hofmann, University of Mannheim and Institute for Employment Research (IAB)

We study whether the business cycle at college graduation affects fertility decisions among university graduates in the years after graduation. Do graduates postpone parenthood when entering the labor market in economically bad times or do they use an economic downturn to start a family? We answer this question using German survey data of the National Educational Panel Study (NEPS) covering a long observation period of over 30 years. We use duration analysis and estimate the effect of graduating in a downturn on entering the first parenthood. We find that the business cycle at graduation affects female fertility but not male fertility. Graduating in a downturn increases the transition rate to the first pregnancy among women significantly. The effect is strongest in the years two to four after graduation and then decreases over time.