There is broad evidence of a reversal in the negative correlation between fertility and labor supply for many developed countries. At the same time, immigrants seem to contribute to the household services sector, by reducing its market cost and expanding its size. This paper analyses the effect of immigration on labor supply and fertility decisions of young British women, in addition looking at the role of immigration on the market structure of household services. We use the British Quarterly Labour Force Survey (QLFS) and the British Household Panel Survey (BHPS) for the period 2003-2007 and exploit variation of immigrants in local areas (Local Authority District). Our results show that immigrants increase the labor supply of highly educated women at the intensive margin, despite not having any effect on their fertility decisions. The results are robust to the endogeneity of immigrants location and seem to be driven by the contribution of immigrants to the household production. Rising the local share of immigrants increases the size of the market for household services, and reduces their market costs, at the same time without having any effect on the market structure of childcare services.
Institute for Employment Research
Agnese Romiti is a Researcher at IAB, the Institute for Employment Research in Nuremberg. She holds a Ph.D. in Empirical Economics from Tor Vergata University in Rome. Her fields of interest are Labor Economics, Migration, and Applied Microeconometrics.