Women’s Wages and Fertility Hazards in South Korea

Introduction

For the last four decades, total fertility rates in South Korea (hereafter Korea) have dropped unprecedentedly. To illustrate, the total fertility rate was 4.530 in 1970, but decreased below the replacement level of 2.1 in 1984 (Statistics Korea, 2015). Korea plunged into the lowest-low fertility of 1.3 in 2001 (Kohler, Billari, & Ortega, 2002) and failed to get out of this category even by 2013, when the total fertility rate was 1.187. Due to concerns over economic and social consequences of the lowest-low fertilities, scholars and experts have actively investigated various factors behind the delay or postponement of childbearing behaviors (for a brief overview, see Eun, 2003; Frejka, Jones, & Sardon, 2010). For instance, T. Kim, Lee, and D. Kim (2006) evaluated the decennial census from 1980 to 2000 to associate the emergence of low fertility with rapid urbanization and the expansion of higher education for women. Comparing differential fertility before and after the 1997 Asian economic crisis, a study reported that women from high-level socioeconomic backgrounds moved from a high to low fertility schedule (D. Kim, 2009).

Notwithstanding this strong body of literature, differential fertility according to women’s wage levels and their shares in total household income has rarely been a main topic of study in the Korean context. We can locate only a couple of articles that address our first research question and none for the second. Analyzing the 2006 Survey on the National Fertility, Family Health and Welfare, Min (2008) found negative effects of women’s wage on fertility hazards of first and second childbirth. In a similar vein, Kim reported that “the increase in female wage by 10 percent leads to a decrease in second birth hazard by 0.56~0.92 percentage points” (J. Kim, 2009, p. 106).

This article fills the gap by attempting to evaluate the effects of women’s wage on fertility hazards. The study subject is one of the crucial issues in the current Korean society, particularly because the government keeps trying to allure women who are out of the labor force into the labor force by creating bad, temporary, and low wage jobs (Yeo, S. Kim, E. Kim, & Choi, 2013). If women with low wages are found to register low fertility hazards, it is not difficult to infer that the current policy of job creation will have directly opposite effects to its intent of boosting lowest-low fertility rates.

In addressing this controversial topic, the current study extends beyond the previous studies in several critical aspects. First and foremost, we will present theoretical formulations on the relationship between women’s wages and fertility hazards grounded on economic, sociological, and demographic research. In addition, both women’s wage levels and the percentage in household income have been considered to evaluate gender equity theory. Further, we use nationally representative, prospective longitudinal data, which is starkly contrasted with previous research that examined retrospective cross-sectional data. So our results presented in this article can be safely considered to provide stronger in ferences than ever before (Wooldridge, 2002). Throughout this paper, we apply the Cox proportional hazards model to parity specific datasets, as several previous articles have demonstrated that the same factor would affect fertility differently depending on child parity via distinct theoretical mechanisms (Kim, 2007; Stolzenberg & Waite, 1977).

Theoretical Backgrounds

Regarding the relationship between women’s wages and fertility, the most basic economic theory predicts that higher wages lead to greater fertility hazards (Becker, 1960). This argument makes sense because, other things being equal, higher wages can be translated into greater purchasing power in terms of economic resources for children. Given that bearing, delivering, and rearing children costs a significant amount of material goods, women postpone or forgo childbearing when they do not have sufficient disposable income, whereas those who enjoy high wages can afford an additional child. Thus, under this economic resource framework, we envisage the positive effect of women’s wages on fertility hazards (Do & Choi, 2013). Note that the economic resource argument may be applied to different levels of parity, such that women’s high wages act as a benevolent factor enhancing fertility risk regardless of a parity distinction.

However, what puzzled Becker is the negative relationship between household income and fertility. Becker’s economic theory (Becker, 1960; Becker & Lewis, 1973) attempted to solve this conundrum by introducing child quality versus quantity even though the theory has been widely criticized for being too simplistic and non-feminist, if not anti-feminist, in part because it failed to distinguish two cooperative but many times conflicting actors: husband and wife (e.g., Folbre, 1983). Unlike child quantity, child quality is elastic to income such that demand for child quality increases as income rises, resulting in higher costs for an additional child. Therefore, Becker predicted that the desired number of children would decrease as household income increased. According to this child quality and quantity theory, women’s high wages may decrease childbirth hazards. With regard to child parity, we anticipate that high wages have greater negative effects for high parity than low wages because women who earn high wages are more likely to invest resources in raising already born child(ren) than in bearing another child.

The third economic theory hinges on the concept of opportunity cost. Having a child not only means spending economic resources but also involves opportunity cost, which implies a difference between alternative utilities that women can purchase and utilities related to a child. Time or leisure has been widely cited as the most important mediator converting one opportunity cost to another in this respect (Becker, 1965). More specifically, an hour spent on children would cost much more for women with high wages, such that these women would maximize utilities by reducing the number of children. However, the opportunity cost increases further when we consider the careers of women in the labor market. It has been repeatedly demonstrated that women returning to the labor market after delivering a child confront low wages, precarious employment, and unfavorable working conditions (Budig & England, 2001). Thus, women with high wages who also tend to be ensconced in an agreeable working environment are likely to relinquish those benefits and fall to relatively lower-status jobs by deciding to give birth to a child. In this line of research, we find another reason for women with high wages to delay or forsake childbirth.

It is not easy to determine whether the opportunity cost would increase or decrease with an additional child. If we narrow our focus to household chores involved in childbearing and childrearing, then economies of scale and experiences with previous children would reduce the opportunity cost as women move to higher levels of parity. However, note that this reduction is based on the simple comparison between, for instance, a first child and a second child. Assuming increasing marginal costs, the price for an additional child is likely to be more prohibitive for higher levels of parity. With consideration of jobs and careers, the opportunity cost also looms larger for higher levels of parity, particularly if job opportunities are more restricted for older mothers. This statement cannot be truer than in Korea, wherein women workers are expected to work overtime with labor-intensive workloads but with low wages (Monk-Turner & Turner, 2008; Patterson & Walcutt, 2013).

Sociological theories regarding role conflict and role balance provide additional theoretical grounds for formulating the effect of high wages on fertility hazards. Role conflict theory states that there is a conflict between the roles of mother and worker, such that working women confront difficulties in bearing and rearing children (e.g., Sung, 2003). By contrast, role balance theory posits harmless compatibility, if not beneficial substitution, between two roles as far as women “become fully engaged in the performance of every role in” work and family (Marks & MacDermid, 1996, p. 421). For instance, lively interactions with a child may refresh women who undergo frustrating events in the labor market. Clearly, jobs with high wages are demanding and exacting, particularly jobs that are occupied by women in the prime period for childbearing when they struggle at the entry level (Bianchi & Milkie, 2010). In this vein of reasoning, it seems reasonable to state that role conflict theory prevails over role balance theory leading to the negative effect of high women’s wages on childbirth hazards.

Role conflict theory evolved to gender equity theory, which has been a dominant theory explaining the low and lowest-low fertility in industrialized societies for more than a decade (McDonald, 2000). Adopting a cross-national perspective, McDonald argued that the emergence of very low fertility could be attributable to unequal advances in gender equity between individual-oriented and family-oriented institutions. In his view, “when gender equity rises to high levels in individual-oriented institutions while remaining low in family-oriented institutions, fertility will fall to very low levels” (McDonald, 2000, p. 437). We can draw several different hypotheses on the effect of women’s wages on fertility hazards by applying gender equity theory.

Women with high wages feel more obligated toward work because jobs affording high wages tend to be more competitive, calling for individualistic commitment. Other things being equal, women with high wages are thus more likely to postpone or relinquish the choice to bear a child. In this respect, it is of particular interest to note the phenomenon of the “marriage strike,” which refers to the tendency for highly successful women to delay or even forgo marriage because they refuse to accept traditional Confucian values of family (Hwang, 2014). If this is the case, we will observe a negative relationship between wage and fertility hazards because a large portion of Korean childbirth occurs within marriage (only 2.1 percent of childbirth was out-of-wedlock in 2013 [Statistics Korea, 2015]).

However, it is doubtful to assume “other things being equal,” particularly given the context of assortative mating in Korea. For instance, women with high wages are likely to partner with males with high educational attainment and high wages who are in turn more willing to assist, help, or share household work and childrearing burdens (Kravdal & Rindfuss, 2008). In the latter case, women with high wages feel more equitable, which promotes fertility hazards.

We can draw the other implication from gender equity by asking whether women’s wage can be treated as a prism of gender equity. If we think of a nuclear family as a joint enterprise between a husband and a wife, then it seems inevitable that wives who contribute more to household income are more likely to command household resources, and household labor is more likely to be equally shared with their husbands. If women feel comfortable managing the work and responsibilities that are involved in childbirth, then they will be eager to give birth to a child. The more women contribute to household income, the more likely they are to enjoy gender equity, resulting in higher fertility hazards. In this regard, we will test the effect of women’s wage percentage in household income in addition to women’s wages per se on fertility hazards.

However, the same gender equity theory may lead to a totally different fertility behavior if we take son preference into account. Even though Korea has observed a rapid decline in son preference in recent years (Chung & Das Gupta, 2007), there still remained noticeable differences in numbers of births by gender, particularly in higher parities, throughout our study period. For instance, in 1998 the number of male births per 100 female births was 108.1, and 105.6 in 2008 for the second childbirth (Statistics Korea, 2015). In this context, it seems reasonable to predict that women with high wages will exhibit low childbirth hazards because they feel empowered to voice their own reproductive rights and are less affected by the strong son preference of other family members.

Thus far, we have discussed a number of theories relating fertility hazards to women’s wages. In doing so, we acknowledged the possibility that each theoretical mechanism may operate differently depending on child parity. In addition, we attempted to elaborate on how these mechanisms may be compromised or reinforced at higher levels of parity whenever possible. Finally, we would like to introduce a theory that directly addresses this issue: the learning hypothesis (Stolzenberg & Waite, 1977). Originally proposed to explain the strong inverse relation between women’s age and the effect of labor force participation plans on fertility expectation, this hypothesis can be easily extended to explain different forces of the same theoretical mechanism based on child parity. For instance, women who have earned high wages throughout their reproductive age may hesitate to bear a second child if they realized that their husbands were not as helpful as they had expected in the first childbirth. If this hesitation was indeed a factor, then the positive effect of high women’s wages would diminish second childbirth hazards.

Data and Measurement

Results

Descriptive Statistics

Table 1 summarizes the descriptive statistics according to variables included in our analyses. We compute person-years at risk of first (or second childbirth), numbers of a first (or second) childbirth and incidence rates. Incidence rates can be interpreted as “the ratio of new children in a particular period divided by the person-years lived in a population (Preston, Heuveline, & Guillot, 2001).” We multiply the original rate by 1,000 to simulate incidence rates for 1,000 women. This measure can be interpreted as indicating how many children a woman would give birth to for one year of duration of 1,000 females at risk of a first (or second) childbirth (Kim, 2014). Additionally, note that fertilities are displayed according to variables and parity for complete information.

Table 1.

Person-years, number of childbirths, and incidence rates by variables

The first row shows that, on average, approximately 40.45 first children and 127.51 second children per 1,000 women would be born if women were under the same fertility risk for one year. We present incidence rates by age intervals in the second row block, although age serves as the analytical time. We observe the highest fertility levels for the first childbirth in 25-34. We find that the age intervals of 20 through 34 are the prime time for the second childbirth. Sharply enhanced incidence rates for the second childbirth appear to indicate that young women who gave birth to their first child tended to rush into the second childbirth. However, the dramatic fall in incidence rates after age 35 reflects the previous finding that those who did not give birth to a baby before age 36 were likely to forgo childbirth, whether a first or second childbirth (Park & Kim, 2003).

Across two parities, fertility statistics on women’s wages reveal a tendency for women with high wages to have experienced a high risk of childbirth. For instance, women who earned up to 1 million KRW would give birth to 36.59 first children, whereas those who received more than 2 million KRW would deliver 103.09 first children. This gap by wage levels appears to be similar for the second childbirth, although the difference is less pronounced. One interesting finding in the row block is that women out of the labor force registered the lowest fertility for the first childbirth, but those women were the most fertile for the second childbirth. This result clearly demonstrates the M-shaped women’s labor force participation in Korea, in which young women leave the labor force when they marry or become pregnant and do not return until they give birth to the desired number of children or raise children to an age when they do not need mothers’ intensive care (Lee & Cho, 2005).

The fourth row block displays differential fertility according to the percentage of women’s wages in household income. With respect to the first childbirth, we can observe that the higher percentages of women’s contributions to household income are correlated with greater fertility risks. More interestingly, the fertility gaps feature a well-spaced gradient in which a jump to the higher category appears to have raised a similar amount of fertility risk across categories. However, the tendency is reversed for the second childbirth. In other words, incidence rates decreased remarkably as the percentage increased for the second childbirth.

Because graphical representation would substantially refine our understanding of the previous observations, Figures 1 and 2 are presented below. Figure 1 describes fertility hazard schedules for first childbirths over the reproductive ages by our main causal variables, women’s wages and their percentages (Cleves et al., 2004). In the graphs, the x-axis refers to age in years, and the y-axis marks the hazard rates for the first childbirth.

Figure 1.

Hazard rates of the first childbirth by women’s wages and their percentagesNotes. Unit of women’s wages is 10,000 KRW. Out of LF refers to women out of the labor force.

First, we observe that hazard rates increased as women aged until approximately 30, but they decreased thereafter, forming a sort of normal distributions. The hazard curves on the left panel show remarkable proportionalities by categories of women’s wages with arresting hazard gaps at the peak but decreasing gaps toward tails, which increases our confidence in choosing the Cox model. However, the hazard curve for women out of the labor force shows the highest level across all ages, which appears to contradict our previous findings that those women did not register the highest fertility rates in Table 1>. This finding was observed simply because a dominant portion of risk exposure for those women occurred when they were in school, which inflated the denominator in the fertility rate that led to the low fertility rate. As they graduated from schools and entered the labor force, the denominator of the hazard curve displayed in Figure 1 became considerably small, unraveling the true trajectory of the hazard rate. We also find that women earning more than 2 million KRW experienced higher hazards than women receiving up to 1 million KRW. Women in the wage category between 1 million KRW and 2 million KRW exhibited the lowest fertility level.

The graph in the right panel shows the hazard curves according to the percentage of women’s wages in household income, which appears to support the proportional hazard assumption once again. The hazard curve for women out of the labor force is the same as we observed in the left panel, as expected. The difference between women with percentages of up to 30 and those with percentages of 31 to 70 appears negligible, whereas women with percentages greater than 70 exhibited somewhat higher fertility hazards compared with the other two groups.

Figure 2 above provides hazard schedules for the second childbirth according to women’s wages and their percentages. Note that the x-axis in Figure 2 indexes months after the first childbirth because the risk of second childbirth begins from the birth of the first child. Hazard curves for the second childbirth are distinguished from those for the first childbirth in that the former did not form normal distributions but left truncated normal distributions. Namely, hazard rates began at high levels from the number of months after the first childbirth and then increased until approximately 42 months to decline along the steep curves. These patterns are likely to have emerged because women who preferred to have a second child must have made this decision one or two years after the first childbirth, feeling rushed to obtain the desired number of children.

Figure 2.

Hazard rates of the second childbirth by women’s wages and their percentagesNotes. Unit of women’s wages is 10,000 KRW. Out of LF refers to women out of the labor force.

The hazard rates according to women’s wages appear to deviate from the proportional hazard assumption. The main force behind the non-proportionality is the atypical hazard function of women who enjoyed more than 2 million KRW in wages. These women did not show an increase but a constant decrease from the initial level. This finding is consistent with the argument that only selective women with high wages were willing to have a second child and that these women hastened to complete their fertility schedules to return to their careers as soon as possible (Park & Kim, 2003). It is worth noting that women out of the labor force were not matched with the other wage groups in their enhanced hazard rates for the second childbirth (Kim, 2014). Nevertheless, it is evident that women earning between 1 million KRW and 2 million KRW traced along a higher hazard curve than women receiving up to 1 million KRW. By contrast, it is notable to recognize that as the percentage of women’s wages in household income increased, the levels of fertility hazards decreased in the right panel.

Statistical Results

Table 2 below exhibits the coefficients in three Cox regression models for the first childbirth. The model number refers to the models introduced in the statistical method section.

Table 2.

Statistical results for the first childbirth

In modern causal inference literature, confounding variables are supposed to influence women’s wages and fertility levels such that those coefficients on confounding variables do not recover marginal or total effects (Wooldridge, 2002). Those coefficients instead represent conditional effects not mediated through women’s wages because we add women’s wages to the models. For instance, we should exclude women’s wages from the models if we wish to estimate the effect of educational attainment on fertility because one of the critical theoretical mechanisms is mediated through the wage effect. If we included educational attainment and women’s wage, then we would be in a grey area when we interpret the coefficients on educational attainment. Thus, we focus on interpreting coefficients on the main variables of interest in this paper, although the other coefficients are listed in the result tables.

Several interesting patterns emerge from Table 2. First, we discover that high women’s wages were likely to enhance fertility hazards, although the effect had categorical rather than linear effects. To illustrate, women in the category of the 1-to-2 million KRW exhibited exp(0.038)=1.039 times the hazard rates as women in the category of 1 million KRW or less. However, the hazard rates steeply increased as exp(0.618)=1.855 times for women in the category above 2 million KRW. In addition, the hazard rates sustained as exp(0.551)=1.735 times for the out-of-labor-force category. The first coefficient is not statistically significant at the conventional α-0.05 level, whereas the last two coefficients are, suggesting that the first difference may stem from mere chance. We also test the difference of the coefficients on the 1-2 million KRW and more than 2 million KRW categories to obtain a statistically significant difference at the α-0.05 level.

The results in the second are still consistent with the previous findings, although the effect parameters exhibit slight changes in size. In other words, we detect a minor difference between women earning up to 1 million KRW and women earning 1 to 2 million KRW but a vast difference between the former women and women with wages above 2 million KRW. Regarding differential fertility according to the percentage of women’s wages in household income (Model 3), we observe that the differences are negligible in both effect size and statistical significance.

Table 3 below delivers estimates in various Cox models for the second childbirth.

Table 3.

Statistical results for the second childbirth

From Table 3 we find that women with high wages were more likely to give birth to a second child than women with low wages. However, these estimates are not statistically significant, particularly because of the small number of childbirths for women in the labor force, as Table 1 demonstrated. Women out of the labor force were strikingly more likely to give birth to a second child than any other groups in the labor force (all differences are statistically significant). This finding appears to reflect the social milieu in which a dominant portion of women does not return to the labor force until they complete their fertility schedules (Park & Kim, 2003). The coefficients from Model 2 do not deliver distinguishably different results from those of Model 1.

Finally, it is somewhat surprising to find that women whose wages contributed to 30% to 70% of household income were likely to exhibit lower fertility hazards than women whose contribution was less than 30%. Although this estimate is not statistically significant at the conventional α-0.05 level, its p-value is 0.068. The effect size is exp(-0.427)=0.652, meaning that the fertility hazard of the former group was less than two-thirds of the fertility hazard of the latter group. We argue that this finding indicates a substantively significant effect because 1) the effect size is not negligible, 2) the numbers of events in these groups are too small to properly evaluate their statistical significance as Table 1 documented, and 3) its p-value is 0.068.

Conclusion

Our findings can be summarized as follows. Regarding the first childbirth, we found that women who earned more than 300 sustained higher levels of hazard rates than women having garnered up to 100. However, the percentage of women’s wages in household income did not make a perceptible mark on fertility hazards. Analysis of second childbirth data revealed that women out of the labor force enjoyed starkly distinguished hazard rates compared with all other wage groups. High shares of women’s wages in household income appeared to depress fertility hazards.

It is quite astonishing to observe that women’s wages had a positive effect on fertility hazards for the first childbirth but not for the second. Particularly given that previous studies reported the negative effect of women’s wages (J. Kim, 2009; Min, 2008), we are urged to speculate the underlying reasons for the positive effect for the first childbirth. Leaving further study for future work, we can only provide two plausible scenarios. First, positive theoretical mechanisms might prevail over negative mechanisms in Korea. For instance, the economic resource argument could be more appropriate for explaining childbearing behaviors of Koreans than the opportunity cost argument (e.g., Workman & Lee, 2011). Furthermore, it seems plausible that women who chose to bear a first child did not realize the work-family conflict to its full extent. The second explanation would be that previous studies assigned women out of the labor force to the zero wage category, such that the fertility-enhancing effect of remaining out of the labor force was traversed into the low wage effect. However, we believe that we should compare women in the labor force to properly evaluate the women’s wage effect.

We also wonder why women whose wages contribute more than 30% to 70% of household income were less likely to give birth to a second child than women whose wages were less than 30%. As we discussed in the theoretical background section, this result may be linked to son preference running through gender equity. In other words, females with high wages would be more empowered to argue for their own reproductive rights than those with low wages, so that they would discontinue having children even if they did not have a son.

Another afterthought would be that these women suffer from the “second shift” more than any other groups (Hochschild, 1989). These women would not enjoy the luxury to decrease their workloads in the labor market because they would be obliged to contribute to their household income as a result of the low wages of their husbands. By contrast, these women would fail to earn wages that would be sufficient to diminish household labor, such that they would or could not voice the gender equity in their families. In other words, these women would be caught in the middle of the work-family conflict because their gendered positions (Sung, 2003). It is also worth noting that this finding is remarkably consistent with S. Kim and E. Kim’s study (2007) showing that housewives in the range of relative income between 40 percent and 60 percent spent longer hours doing housework than any other housewives (see also Yoon, 2010).

We must acknowledge certain limitations to properly evaluate our contribution to the current knowledge on the effect of women’s wages on differential fertility in Korea. We are primarily concerned with the fact that our results were based on an observational study, which is vulnerable to the omitted variable bias (Wooldridge, 2002). There could be a confounding variable that was not measured but that affected both the causal variables and outcome variables. One possibility may be beauty or physical attractiveness, which has been demonstrated to influence women’s wages and fertility hazard rates in a positive direction (Jokela, 2009). In this case, our positive estimates would be upwardly biased. Therefore, readers should exercise due caution when interpreting our results.

Our analysis is also limited in scope in that we included only first and second childbirths. Distinguished childbearing and childbirth behaviors may be widely practiced for higher-parity childbirth decisions (Kim, 2007). After analyzing Swedish longitudinal data, for instance, Heckman and Walker (1990) found that the effect of women’s wages on completed fertility worked through the decision of bearing a third child. This finding is likely to be particularly relevant in Korea, which registered the lowest-low fertility levels in the study period because of forgoing third childbirth and higher parity. In other words, it is critical to understand which characteristics are associated with the third childbirth decision when most women who are capable of more childbirth are ensconced with at most two children. Our next step should tackle this issue by extending our analysis to higher levels of parity.

Despite these limitations, we are certain that analyses presented in this paper contribute measurably to the current knowledge on the factors that cause Korea to exhibit lowest-low fertility. Beyond scholarly interests, our findings also have direct bearings on policy formulation in Korea, wherein there is a strong drive to attract women into the labor force to handle the diminishing labor force, which partly stems from lowest-low fertility. For instance, there is a continuous effort by government to pull women out of the home into the labor force (Yeo, S. Kim, E. Kim, & Choi, 2013). However, our results demonstrate that jobs with low wages would further entrench low fertility rates, propelling a vicious cycle. Those jobs will also fail to attract and attach women to the labor market. Therefore, our message is as follows. By creating decent jobs with high wages, we can improve women’s labor participation rates and boost fertility rates as an ideal solution to addressing the ongoing lowest-low fertility issue.

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