Local & Regional Government Quality Boost European Birthrates

Study of 216 regions shows ~1% governance improvement linked to ~8% fertility increase

Photo by Reuben Mcfeeters on Unsplash

An interesting study (Regional government institutions and the capacity for women to reconcile career and motherhood) published in the Journal of Economic Geography by researchers Costanza Giannantoni from Sapienza University of Rome and Andrés Rodríguez-Pose from the London School of Economics reveals that women across Europe face tough choices between careers and motherhood - but better local government could help solve this dilemma. Their research finds that regions with higher-quality governance help women balance work and family life more effectively, offering crucial insights for policymakers and regional development.

The big idea

While more European women join the workforce, fertility rates have plummeted to historic lows. This has created demographic challenges as populations age. However, some regions, particularly in Nordic countries, maintain high female employment and healthier birth rates.

By the numbers:

• The EU's female employment rate hit 69.3% in 2022, still below men's 80% rate

• Two of every three new jobs created in the EU over two decades went to women

• Average fertility dropped to 1.53 births per woman in 2021, down from 2.7 in 1950

• A 1% increase in regional government quality is linked to an 8% rise in fertility rates

• High-quality governance reduces by 11.1% the chance of a region having both low fertility and low female employment

Between the lines: Local institutions are crucial in creating environments where women can pursue career ambitions and family life. This happens through:

• Effective public services and childcare infrastructure

• Implementation of gender equality policies

• Labor market access for women and young workers

• Subsidized childcare and generous parental leave policies

• Equal pay legislation and welfare support

Deep dive - Regional variations:

1. Analysis of peak fertility rates reveals French regions as clear leaders in promoting family formation. Provence-Alpes-Côte d'Azur demonstrates the highest fertility rate at 2.02 births per woman, with Nord-Pas-de-Calais following closely at 2.01. Additional French regions showing strong performance include Picardie at 1.998 and Île de France at 1.996, suggesting that French regional policies and institutional structures provide particularly effective support for family planning and childbearing decisions.

2. The lowest fertility rates cluster predominantly in Spanish and Italian regions, indicating potential systemic challenges. Principado de Asturias records the lowest rate at just 1.01 births per woman, while Canarias follows at 1.03. This pattern continues with Galicia at 1.07 and Sardegna at 1.09, highlighting a concerning trend in Southern European regions that may reflect institutional and policy limitations in supporting family formation.

3. Female employment reaches its highest levels in Nordic regions, with Stockholm achieving an exceptional 81.03% employment rate. Småland Medoarna follows with 79.12%, while Västsverige and Övre Norrland maintain similarly impressive rates at 78.72% and 78.53%, respectively. These figures reflect the success of Nordic welfare systems and institutional frameworks in facilitating women's participation in the workforce while maintaining support for family life.

4. Southern European regions, particularly Italy, demonstrate the lowest female employment rates, revealing significant challenges supporting women's workforce participation. Campania records the lowest rate at 27.7%, followed by Sicilia at 30.95%, Calabria at 32.42%, and Puglia at 33.44%. The stark contrast between these rates and those in Nordic regions underscores the impact of regional institutional frameworks and policy implementation on women's ability to participate in the labor market. This variation is particularly pronounced within Italy, where the gap between Campania (27.7%) and Provincia Autonoma di Bolzano (73.00%) illustrates the significant role of regional governance in determining employment outcomes.

Research methodology:

• Panel data from 216 regions across 18 European countries (2010-2019)

• The European Quality of Government Index measures citizens' perceptions.

• Controls for GDP, population metrics, education levels, and labor market characteristics

• Both GMM estimation and region-specific linear time trends

Key findings on institutional quality:

1. The relationship between government quality and fertility rates emerges as a defining feature of regional gender equality in Europe. The paper demonstrates that an estimated 1% improvement in institutional quality correlates with an estimated 8% increase in fertility rates. This relationship remains statistically significant even when accounting for various socioeconomic factors, including GDP per capita, population metrics, education levels, and labor market characteristics. This correlation maintains strength across different analytical approaches, including GMM estimation and region-specific linear time trends, suggesting a robust and consistent relationship between institutional excellence and fertility outcomes.

2. Higher institutional quality fundamentally enables better work-life balance through multiple reinforcing mechanisms. Regions with superior governance demonstrate more effective implementation of family-friendly policies, more efficient public services, and more reliable childcare infrastructure. The European Quality of Government Index data reveals that citizens in these regions report higher satisfaction with public services and greater trust in institutional support systems. These regions successfully create environments where women can pursue professional ambitions and family life without sacrificing, mainly through well-executed gender equality initiatives and consistent support systems for working parents.

3. Weaker institutions consistently force difficult trade-offs between career and family aspirations. The data reveals that declining institutional quality correlates strongly with decreased female employment rates, even in areas where fertility remains relatively high. These regions often lack adequate support structures for working mothers, leading to situations where women must choose between career advancement and family formation. The research finds that regions with lower institutional quality scores are significantly more likely to exhibit either low female employment, reduced fertility rates, or both, creating environments where work-life balance becomes exceptionally challenging.

4. Regional governance quality substantially affects how effectively policies are implemented and maintained. Strong regional institutions prove better equipped to translate national and EU-level gender equality policies into practical, functioning support systems. This includes successfully implementing parental leave policies, maintaining high-quality childcare facilities, and ensuring equal pay legislation is properly enforced. Beyond formal policy implementation, these institutions help shape social norms and attitudes toward working mothers, creating more progressive and supportive environments. The research demonstrates that regions with higher institutional quality scores show more consistent and effective policy implementation across all these areas, ultimately creating more reliable and supportive environments for working parents.

Regional patterns identified:

1. The optimal scenario combines high fertility with high female employment, most commonly found in Nordic regions. These areas benefit from comprehensive social systems, robust labor market regulations, and a strong commitment to gender equality. Their regional institutions typically implement gender-neutral parental leave policies, subsidized childcare, and equal pay legislation. This creates an environment where balancing career and family life becomes achievable rather than aspirational.

2. The second pattern shows high fertility but low female employment, reflecting more traditional gender role environments. These regions often have strong family support systems but limited infrastructure for working mothers. The research indicates that declining institutional quality correlates with decreased female employment rates, even when fertility remains high. This suggests that weaker institutions may inadvertently reinforce traditional gender roles.

3. The third pattern involves regions with low fertility but high female employment. These areas typically offer strong career opportunities but lack adequate family support structures. Women in these regions often face high opportunity costs for motherhood, leading to delayed or reduced childbearing. The prevalence of temporary contracts in these regions exacerbates this trend, with job uncertainty influencing decisions to postpone or avoid childbearing.

4. The fourth pattern, showing both low fertility and low female employment, represents the most challenging scenario for both birth rates and gender equality. These regions typically have the weakest institutional support and impose the greatest constraints on women's choices. A 10% increase in government quality can reduce the likelihood of a region falling into this category by 11.1%, highlighting how crucial institutional quality is for avoiding this worst-case scenario.

The impact of labor policies:

• Part-time work: Shows mixed results in supporting work-life balance

• Temporary contracts: Generally discourage both employment and childbearing

• Income inequality (Gini Index): Higher inequality associated with lower fertility

• Education levels: Higher female education linked to increased labor participation

Policy implications:

1. Regional governance quality should be central to both gender equality and natalist strategies.

2. Institutional improvements could reduce work-family trade-offs.

3. Current labor market flexibility tools need rethinking.

4. Targeted policies must address specific regional challenges.

Looking ahead: While improving regional governance won't eliminate all barriers to gender equality or is the end all or be all in boosting birth rates, it provides a crucial foundation for progress on both fronts.

Bottomline

Regional governance could help solve Europe's demographic challenges by creating conditions where women don't have to choose between work and family. This has significant implications for EU policy focused on gender equality, regional development, and demographics.