The effects of immigration on household services, labour supply, and fertility

Fertility and female labour force participation are no longer negatively correlated in developed countries. At the same time, increased immigration affects supply and prices of household services, which are relevant to fertility and employment decisions. This paper analyses the effect of immigration on labour supply and fertility of native women in the UK. Adopting an instrumental variable approach, I find that immigration increases female labour supply without affecting fertility. My results show that immigration increases the size of the childcare sector, and reduces its prices, suggesting that immigrants may ease the trade‐off between working and child rearing among native women.