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France: Job Insecurity & Fertility

Study: A Natural Experiment on Job Insecurity and Fertility in France

  • Historical Context: France’s labor market is known for its robust worker protections, often characterized by strong regulatory frameworks.
  • Employment Protection Legislation (EPL): France’s EPL, among the strictest in Europe, includes comprehensive regulations on dismissals, layoffs, and contracts, creating a distinct labor environment.

The Delalande Tax and Labor Market Reform

  • Origins and Development: The Delalande tax, introduced in 1987, was initially designed to prevent layoffs among older workers. Over time, it saw several modifications, adjusting to changing labor market needs.
  • 1999 Reform: A significant change occurred in 1999, with the tax increase affecting only firms with more than 50 employees, thereby creating a differential impact across firm sizes.

Impact of the Reform on Job Security and Fertility

  • Increased Job Insecurity: The 1999 reform unintentionally heightened job insecurity for younger workers in large firms, as it made layoffs more expensive for older workers.
  • Decline in Fertility Rates: This increased sense of job insecurity among these workers correlated with a noticeable decrease in fertility rates.

Methodological Approach to the Study

  • Data Utilization: The European Community Household Panel, a rich data source on European households, provided the basis for analysis.
  • Analytical Strategy: Employing a difference-in-differences methodology, the study aimed to isolate the causal effect of the labor reform on fertility decisions.

Detailed Findings of the Study

  • Fertility Reduction: The study revealed a 4% decrease in the probability of having a new child in the affected demographic groups.
  • Affected Groups: The fertility impact was notably stronger among workers with higher income and education, as well as those who already had children, indicating a varied impact across different social strata.

Policy Implications and Social Impact

  • Challenges for Policymakers: The study’s findings pose significant questions for policymakers about balancing labor flexibility with family-friendly policies.
  • Social Ramifications: The research highlights the potential for labor policies to inadvertently influence demographic patterns and family structures.

Wider Context of French Labor Market Characteristics

  • Workweek Regulations: The landmark decision to reduce the workweek in France from 39 to 35 hours for larger companies in 1998 also played a role in shaping job security perceptions.
  • Public vs. Private Sector Dynamics: France’s public sector, known for higher job security, contrasts starkly with the private sector dynamics, offering a unique perspective on employment stability.
  • Global Comparisons: When compared globally, France’s labor market stands out for its employee-centric regulations. This contrasts with more flexible labor markets like those in the U.S. or the U.K.
  • Economic and Social Balancing Act: The French model represents a balancing act between protecting workers and fostering economic dynamism. This balance is critical in addressing modern labor market challenges, including technological disruptions and globalization.

Societal Implications of Labor Market Reforms

  • Changing Family Dynamics: Labor market conditions, as the study suggests, are deeply intertwined with family planning and societal structures, potentially leading to shifts in family dynamics and population demographics over time.
  • Long-Term Social Planning: In light of these findings, long-term social planning becomes crucial, requiring a holistic approach that includes labor market policies, family support systems, and education.

Broader Considerations and Future Directions

  • Link Between Labor Policies and Demographics: The case study offers a clear illustration of how labor market policies can directly impact demographic trends, particularly fertility decisions.
  • Future Policy Evaluation: The findings advocate for a more nuanced approach to labor reforms, considering their wider social and demographic consequences.


  • Comprehensive Policy Development: The intersection of labor market dynamics and fertility rates in France underscores the necessity for comprehensive, forward-thinking policy development.
  • Sustainable Societal Growth: Understanding and addressing the intricate relationship between employment conditions and family planning is key to ensuring sustainable societal growth and stability.