Permanent employment and fertility: The importance of job security and the career costs of childbearing

This article studies the impact of permanent employment on the fertility decision. I identify a causal effect by exploiting exogenous variation in subsidies to permanent contracts. Using a 2SLS specification, I firstly examine whether the subsidies had an impact on the use of open-ended contracts, and, in a second step, whether permanent employment has an effect on the decision to have a child. Holding an open-ended contract has a positive impact on the fertility decision by means of a higher job security. However, this effect vanishes when the career costs of childbearing are high. The paper provides two sets of evidence of the previous findings. My micro results based on individual administrative data are consistent with the estimates obtained using aggregate data.