Temperature shocks and childbearing in Australia

We investigate the impact of temperature shocks on household childbearing decisions in Australia using 21 rounds of longitudinal data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey. We explore the relationship between deviations in average temperature and fertility outcomes by integrating high-resolution satellite temperature data at postcode level with detailed household fertility information from HILDA. Our findings reveal that temperature shocks, particularly cold shocks, significantly reduce fertility: a one standard deviation from the thermally optimal temperature is associated with a 1 percentage point decrease in the probability of childbirth within two to three years. We further examine potential mechanisms underlying this relationship and find that decreased disposable income, poorer health outcomes, reduced fertility desires or intentions, and lower life satisfaction contribute to reduced fertility. These findings highlight the multifaceted ways in which temperature shocks can influence demographic trends, offering important insights for policymakers addressing the socio-economic impacts of climate change.