Why are Fertility Rates and Female Employment Ratios Positively Correlated across O.E.C.D. Countries?

We develop a quantitative theory of fertility and labor market participation de-cisions in order to investigate the role of labor market frictions in generating the observed positive association between fertility and employment among O.E.C.D. countries. We Þnd that unemployment induces females to postpone and space births which, in turn, reduces the total fertility rate. Moreover, differences in female labor outcomes across the U.S. and Spain can account for the low fertility rate in Spain relative to the U.S.. We also Þnd that labor market frictions (low probability of Þnding a job) can generate a positive association between female employment ratios and fertility rates across economies. We are grateful to Andrés Erosa for many comments and suggestions. We also thank the comments of Pedro Mira, Diego Restuccia, José-Víctor Ríos-Rull, and three anonymous referees. We thank Miana Plesc