Fertility: “Unnatural” Evidence of a Natural Experiment from Taiwanese Educational Reform

A discontinous increase in the level of female education may not cause a decline in fertility. We demonstrate this fact by exploiting an exogenous change in female education level due to the 1970s'' Taiwanese nine-year compulsory educational policy. We construct a list of instrumental vari- ables (IVs) valid for female education by utilizing the unexpected change in the compulsory policy so that we could infer the causal effect of education on the completed fertility by the two stage least squares technique. We report that without applying instrumental variables, the ordinary least square estimate shows a staistically significant correlation of education with fertility. Roughly, an increase of one year of education would cause 4.18 less children to be born per hundred women. Nevertheless, the causal relation may be insignificant and eliminated after we re-estimate it by IVs. In addition, we find that instead of postponing the timing of first birth, increased female education raises the probability of motherhood from 21 to 25 years old.