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We study whether (and why) self-employed individuals have higher fertility than employees.
Macro- and micro-level studies have produced inconsistent findings. Self-employment has been associated with income uncertainty and instability and may be negatively related to fertility. However, self-employment also implies workplace flexibility and higher potential income and may positively affect fertility. These mechanisms operate differently for men and women. We use the Italian Survey on Household Income and Wealth for 1995-2014, which includes objective and subjective fertility measures, and distinguish between three types of self-employment: laborer (solo) self-employment, entrepreneurship, and professionals. We show that all self-employed men and laborer self-employed women have higher fertility than comparable wage earners of the same sex. Using an instrumental variable treatment-effect regression approach and work histories, we show that self-employment causes higher fertility. We provide evidence that male and female entrepreneurs have more children because they would like to pass their business to their offspring (and rely on the family labor supply). Contrary to the US studies, Italian women do not perceive self-employment as facilitating work-life balance or encouraging childbearing.