Australia has moderately high fertility compared to many Western-industrialized countries. The current total fertility rate is around 1.88, but fertility levels are not uniform across the country.There is a distinct geographic pattern with the total fertility rate about 0.5 higher in remote and very remote Australia (2.33) compared to major cities (1.82). In this paper, we examine 2 explanations for this pattern: the compositional hypothesis and the contextual hypothesis. Using event-history methods with joint modelling to investigate parity progression, we find that after taking into account differences in age, country of birth, indigenous status, relationship status, education levels, and economic activity, women living in smaller towns in regional Australia are more likely to have a first, second, and third birth. Further, there is lower propensity to have a first child in inner or middle city areas that are characterized by smaller and more expensive housing than suburban or regional areas. Fertility rates also differ considerably across the country and are significantly higher in smaller towns and remote localities compared to cities. The national total fertility rate (TFR) is 1.88, but in remote parts of Australia, it is 2.33, and in major cities, it is just 1.82 (ABS, 2014a).1 The highly urbanized nature of the Australian population means that the national TFR is strongly affected by the fertility levels in cities where the majority of people live. However, the higher fertility levels of rural areas have an important elevating effect on national TFR, as seen in Figure 1.To date, few studies have examined the geographic distribution of fertility in Australia in any depth. In this paper, individual-level longitudinal (2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012) (Fiori, Graham, & Feng, 2014), and other European countries (Basten, Huinink, & Klüsener, 2011). Although these studies have used different approaches and different levels of geographic disaggregation, they all observe considerable spatial variation in fertility and higher rates of childbearing in rural areas.Two explanations have been suggested for this pattern. One is the compositional hypothesis that posits that people living in urban and rural areas have different socioeconomic and demographic characteristics, such as education levels or age profiles, and if these characteristics are also related to fertility that could explain why fertility levels may differ across geographic areas (Fulda, 2015). The contextual hypothesis, on the other hand, suggests that there is something more, over, and above a compositional effect, which has a positive or negative effect on fertility. Contextual factors could include structural reasons such as differences in local labour markets, environmental factors, or differences in cultures and attitudes regarding childbearing (Basten et al., 2011).
| Compositional effectsMuch of the urban-rural differences in fertility are thought to be due to a compositional effect or "residential...