Impact of foreign domestic workers on the fertility decision of households: evidence from Hong Kong

Abstract

Abstract A potential solution to low fertility is the employment of foreign domestic workers (FDWs), who substitute child-rearing and housework duties, thus reducing child-rearing costs. Recent studies argue that the flow of low-skilled foreign workers into the childcare sector influences fertility choice. However, these studies mainly use the availability of FDWs in the local area as the causal inference and focus on Western countries, making it difficult to identify individual direct effects or generalize the findings to other countries. To bridge this research gap and examine the impacts, this study uses household data from the Hong Kong census. Employing ordinary least squares, the inverse probability weighted regression adjustment, and the instrumental variable approach, we find that households that employ live-in FDWs give birth to more children. Moreover, the heterogeneous analysis reveals that women's greater proportional contribution to household income has a positive impact on households' fertility response after employing the FDWs.