The main objective of this paper is to examine how the level of public nursery provision as part of the child-rearing environment in urban areas will have influence on women's behavior towards childbearing and labor participation. We also examined the relation of mutual causality between women's fertility behavior and labor participation, which had hot been demonstrated clearly in past studies. The method of covariance structure analysis is employed in this paper. In order to analyze three causal models, which are based on previous theories and empirical analysis, we use the 1995/96 data of all Japanese cities. Our empirical results can be summarized as follows: First, we have found that the expansion of the level of public nursery provision in urban areas is one of the desirable social policies, which make possible for women to pursue careers and raise families simultaneously. Second, it was clarified that the higher is women's labor participation in urban areas, the more promoted is fertility behavior.
