The Determinants of Fertility and Economic Uncertainty: An Application of the NARDL Model for Hong Kong and South Korea

In: Millennial Asia: an international journal of Asian studies, Volume 13, Issue 3, p. 387-410

Abstract

This article examines the determinants of fertility, using annual data sets from 1980 to 2017 for two major developed economies of the Asian region, namely Hong Kong (China) and South Korea. The article applies the non-linear autoregressive distributed lag model to study the impact of economic uncertainty on fertility decisions in these two countries. Using output volatility measure of economic uncertainty, the study shows that there is an asymmetric impact of economic uncertainty upon fertility decisions. Such an exploration demonstrates the extent of the impact of insecurity in the economy on fertility decisions. Furthermore, the study also explores the impact of infant mortality rate, old-age population, urbanization, income per capita, female employment levels, percentage of women in marriage or union, contraceptive prevalence and human capital formation on fertility decisions in these two advanced economies. The results confirm the asymmetry because the impact of the positive change of uncertainty and the impact of the negative change are not identical. The study concludes that for these major industrialized economies of Asia, economic uncertainty apart from the traditional demographic and economic factors appears to be a crucial factor in impacting fertility decisions.