A trivariate model of participation,fertility and wages: the Italian case

Italy has unusually low fertility by OECD standards, accompaniedby unusually low female participation in paid work. This paperaddresses the issue of the empirical relationship between fertility,female participation in the labour market and wages with theseItalian 'peculiarities' as a backcloth. A trivariate model ofparticipation, fertility and wages has been constructed andestimated using three pooled cross-sections of Italian microdata, allowing for the identification of cohort effects. Thismodel follows a 'purist' approach: the participation and fertilitydecisions, as well as the wage equation, are modelled as completelyjoint. The cohort effects turn out to be significant: the pointestimates do not appear to confirm actual trends, which arenegative for fertility and positive for participation. The femalewage is the most important variable influencing the propensityto have children and the propensity to participate in the labourmarket, casting doubt on suggestions that observed trends arethe products of shifts in women's 'tastes'.