Association for Public Policy Analysis & Management

This study seeks to explain the effects of economic cycles on fertility outcomes in poor areas. The effects of an economic recession extend beyond financial spheres and spill over present and future family decisions via income restrictions and expectations. There are two competing explanations for the relationship between decelerating economies and fertility. First, poor expectations about the future might deter couples from marrying and having children. Hence, if there is a recession, there will be a fertility decline (pro-cyclical response). Second, women facing unemployment will have lower opportunity costs of having children. Therefore, if there is a recession, there will be an increase in fertility (counter-cyclical response). Hardly any research on the effects of economic recessions on fertility outcomes has taken place in developing countries. Aiming to fill this gap, this paper uses a difference-in-difference approach to analyze fertility trends in the third largest economy in Latin America—Colombia—from 1998 to 2009. The results show that within a country, poor and wealthy areas respond differently to periods of economic hardship. In terms of fertility outcomes, poor states have pro-cyclical responses while well-off states tend to have counter-cyclical reactions to economic downturns.