Female Labor Force Participation and Fertility in Iran

Female labor force participation (FLP) has been shown to be inversely correlated with fertility based on most literature. However, despite a considerable decline in fertility rate in Iran over the past two decades, women's participation in labor force has not been increased significantly. To investigate the issue, this study is following two objectives First, to explain the relationship between the FLP and childbearing, theoretically. Second, to study empirically the matter using the data of Household Income and Expenditure Survey (HIES) conducted by the Statistical Center of Iran (SCI) in years 1991 to 2012. Based on the theoretical model, two mutual relationships can be explained for FLP and childbearing.  In one hand, female labor force participation can lead to increase of family income and fertility. On the other hand, there is the substitution effect by which a woman who has desire to bear a child, would undermine her economic participation. Existence of both effects system was confirmed, using simultaneous equations in provincial panel data. To encounter this endogeneity problem, we employed an instrument variable as “same gender of the first two children” for decision of having another child. Based on the results, the relationship between FLP and fertility in Iran is based on the income effect. Accordingly, the substitution effect of childbearing and labor force participation which is under influence of cultural factors, has been evolved. Hence, it does not seem that facilitating FLP and support of employed women would be a threat to fertility behaviors in Iran. Even, it might be considered as an encouraging policy for childbearing by enhancing family income