No Eastern and Central European left behind: A cross country regression for fertility, human capital and market economy

In 1999, fertility rates in Central and Eastern European countries reached the lowest levels in the world. Using panel data, this paper analyses the sharp decline in fertility for these countries during their transition towards a market economy. It extends previous research in three ways: First, it distinguishes education by gender as a proxy for human capital. Second, in addition to GDP more economic variables are used to capture the effect of a declining standard of living, including unemployment. Finally, it tries to capture the relationship between advancement toward a new market economy and fertility. Some of the results reflect some special features of the CEE region: only tertiary education is correlated with fertility; fertility is responsive to a 'business cycle' type of macroeconomic factors, particularly, to female unemployment; and foreign direct investment (FDI) as a proxy for new market economy has a negative association with fertility.