Fertility Effects of Labor Market Conditions at Graduation

Abstract This study examines how individuals' fertility outcomes were affected by the labor market conditions they experienced at graduation. Using data from the Chinese General Social Survey, it finds that poor labor market conditions at graduation delayed individuals' entry into parenthood. Higher unemployment rates at graduation reduced the probability of having at least one child in the survey year for both men and women. The negative fertility effects generally followed a U‐shape, reached the maximum around average childbearing ages, and faded out within 15 years after graduation. Low‐skilled workers mainly contribute to the negative fertility effects observed in the whole sample. Employment and marital outcomes are also analyzed as potential mechanisms. Estimation results indicate that individuals who experienced poor labor market conditions at graduation delayed marriage and the birth of the first child due to a lower probability of being employed, reduced working hours, and adverse income shocks. The negative long‐term fertility effects should be brought to policymakers' attention, especially when China's low fertility issue worsens. Policymakers are expected to create more favorable employment conditions for labor market entrants to encourage fertility and expand the future working‐age population.