Sovereign Risk and Fertility: A Natural Experiment on Italy

Chiara Ludovica Comolli , University of Lausanne

Studies documenting the pro-cyclicality of fertility to business cycles in advanced economies mostly investigate the relationship between labor market indicators and birth rates. However, part of the recent fertility drop witnessed in Europe after the onset of the Great Recession is not explained by labor market measures. Using the case of the sovereign debt crisis of 2011 in Italy, this study shows that a significant drop in births rates was caused by perceived financial uncertainty. The research design consists of a regression discontinuity in time to identify the casual effect of this perceived uncertainty on monthly birth rates at the national and regional level in Italy. Perceived uncertainty is measured using Google trends searches to capture the degree of concern to general public about the stability of Italian public finances. Results show that a drop of 4 births per 1000 women in reproductive age was caused by this concern. Robustness checks corroborate these results.

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 Presented in Session 87. The Changing Correlates of Fertility Timing in Developed Countries