The causal relationship between female labor supply and fertility in the USA: updated evidence via a time series multi-horizon approach

The purpose of this paper is to investigate the causality between female labor supply and fertility in the presence of auxiliary variables such as education, female wages, and male relative cohort size. We employ annual time series data spanning the period 1948 to 2007 for both an aggregate and an age-specific group. Our econometric specification follows closely the concepts and procedures proposed by Dufour and Renault (Econometrica 66(5):1099-1125, 1998) and Dufour et al. (J Econom 132:337-362, 2006) in that we conduct multi-horizon causality tests that allow for direct and indirect effects to take place. The sign and economic importance of our results is assessed via the estimation of impulse response functions. Our results establish bidirectional indirect causality between female labor supply and fertility and suggest interesting causal chains among the system variables. Causality effects are stronger for the age-specific group.