Baby Boom or Bust? Changing Fertility on Post-Communist Czech Republic and Slovakia

Abstract

Transition from a centrally planned to a market oriented economy alters the incentives individuals face as they make consumption and time allocation decisions. Families must reevaluate their fertility plans as a result of new wage structures, reduced government subsidies of the costs of raising children, and uncertainty from a changed economic environment. Using micro-data from 1984 and 1993 in the Czech Republic and Slovakia, this paper estimates a dynamic stock adjustment model, relating observed drops in fertility post-Communism to new wages, prices, and risks. Because transition will have affected only those born in the three years prior to the 1993 data, considering children under age three isolates these effects. Earnings influence total demand for children during Communism through substitution effects for women's earnings and income effects for men's. In all four data sets, earnings levels have little effect on fertility timing, though age and job uncertainty do effect the probability of having young children, particularly following Communism. Earnings changes across regime also impact fertility timing decisions, though the effects are different in the Czech Republic and Slovakia.