On the Relationship between Female Labor-Force Participation and Total Fertility Rate among the OECD Countries: Two Roles of Work-Life Balance

Although it is well documented that the correlation between female labor participation rate (FLPR) and total fertility rate (TFR) among the OECD countries changed from negative (where countries with higher FLPR had lower TFR) to positive during the 1980s, it has not been well known whether this implies a change in the causal relationship between the two variables and, if it does, what the mechanism behind this change is. This article shows that the average effect of FLPR on TFR is still negative when controlling for unobserved heterogeneity in the TFR level, but this effect has been weakened through two mechanisms that involve the role of work-life balance: (1) an interaction effect of FLPR and work-life balance on TFR and (2) a positive indirect effect of FLPR on TFR through the attainment of work-life balance. It also shows that two aspects of work-life balance, namely, compatibility between work and childrearing and the flexibility of workplace and employment, play distinct roles in realizing those two mechanisms.