This paper assesses the importance of peer effects in fertility timing decisions using population-wide matched employer-employee panel data. We provide evidence on for whom, when and why co-workers’ fertility decisions matter. A wide range of specification checks supports a causal interpretation of the estimated effects. We then develop a stylized dynamic model of fertility timing decisions under uncertainty that provides us with predictions that allows us to discriminate between alternative underlying mechanisms consistent with the baseline results. Network externalities seem
to be the primary mechanism through which peer effects may exacerbate fluctuations in fertility rates in our context.