Fertility and socio-economic determinants: evidence from co-integration and multivariate Granger casualty tests

Abstract

Background: The empirical work on fertility determinants widely discusses the role of socio-economic factors like female labour force participation rate, urban population and per capita gross national income in determining fertility rates. The India’s high fertility rate began to decline gradually after late 1950s and continued to fall since then. India achieved almost 31 per cent decline in fertility rate from 1990 to 2012. The objective was to examine the relationship between fertility rate, urbanization, female labour force participation rate and per capita gross national income for India.

Methods: This study covers the sample period from 1990-2012. Moreover, the direction of causality between fertility rate, urbanization, female labour force participation rate and per capita gross national income in India using Granger Causality test within the Vector Error-Correction Model (VECM) are examined.

Results: As a summary of the empirical results, we found that fertility rate, urbanization, female labour force participation rate and per capita gross national income in India are co-integrated and there is unidirectional Granger Causality between the four variables in long and short-run.

Conclusions: The growth in urban population, female labour force participation rate and per capita gross national income are responsible for the decrease in fertility rate in India.