Poster #36 - Employment Protection, Female labor Supply and Fertility Decisions in the United States

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Abstract

Declining fertility rates and stagnating female labor force participation have emerged as dual challenges across advanced economies, including the United States. While studies have highlighted the role of family policies in shaping these outcomes, less is known about how employment protection legislation (EPL)—laws that reduce job insecurity by restricting employer dismissal rights—affects women’s decisions to work and have children. This study investigates how the adoption of state-level EPL exceptions to the U.S. at-will employment doctrine influences both female labor supply and household fertility behavior.

Over the past five decades, states have unevenly adopted three legal exceptions to the at-will doctrine: good faith, implied contract, and public policy. These exceptions offer a natural source of policy variation that this study uses to examine whether job security enhances or delays family formation and women’s labor market engagement. The study builds on the labor-leisure trade-off model, adapting it to consider EPL as a wage-stabilizing force that lowers the opportunity cost of both work and childbearing.

The analysis uses a staggered difference-in-differences (DiD) design with the Callaway and Sant’Anna (2021) estimator to account for variation in adoption timing and avoid bias from “forbidden comparisons.” Data sources include Bai et al. (2020) for EPL policy adoption dates, CDC Natality Detail Files for birth outcomes and fertility timing, and Bureau of Labor Statistics data for female employment rates. By combining individual-level natality data with state-level policy variation, the study enables disaggregated analyses by race, education, and maternal age.

Two hypotheses guide the empirical analysis: (1) EPL has a significant positive effect on female labor supply by mitigating dismissal risk, and (2) EPL has a significant positive effect on fertility decisions by reducing the perceived financial and emotional costs of childbearing. However, increased work attachment may also delay fertility, suggesting an ambiguous net effect that this study tests empirically.

This research contributes to theory by extending household decision-making models to include job security as a key institutional variable. It addresses a notable gap in U.S. labor policy research, which has largely focused on firm-level outcomes of EPL, while underexamining household-level impacts. Policy implications include reevaluating EPL not only as a labor market instrument but also as a tool for supporting demographic stability and gender equity. The findings are timely for state and federal policymakers considering expansions to wrongful discharge protections in the absence of universal family policy.

Author

• Victoria Yaa Osei-Ahenkan, The Ohio State University
  Presenting Author