Income Shocks, Contraceptive Use, and Timing of Fertility

This paper examines the relationship between household income shocks and fertility decisions. Using panel data from Tanzania, we estimate the impact of agricultural shocks on contraception use, pregnancy, and the likelihood of childbirth. To account for unobservable household characteristics that potentially affect both shocks and fertility decisions we employ a fixed effects model. Households significantly increase their contraception use in response to income shocks from crop loss. This comes from an increased use of both traditional contraceptive methods and modern contraceptives. The poorer the household the stronger the effect of income shock on contraceptive use is. Furthermore, pregnancies and childbirth are significantly delayed for households experiencing a crop shock. For both pregnancy and childbirth the likelihood of delay as a result of shocks increases the poorer the household. We argue that these changes in behavior are the result of deliberate decisions of the households rather than income shocks' effects on other factors that influence fertility, such as women's health status, the absence or migration of spouse, and dissolution of partnerships.