Fertility and Female Labour Supply

Maria Iacovou

No 2001-19, ISER working papers from Institute for Social and Economic Research

Abstract: The estimated relationship between the number of children and female labour supply is often negative; however, it is not clear whether this arises because of a causal effect of children on labour supply, or whether it is the result of heterogeneous preferences (women who have a preference for home-based activities have more children and a lower preference for market work). The fact that parents in industrialized countries prefer their families to consist of roughly equal numbers of girls and boys, and are therefore more likely to have a third child if their first two children are of the same sex, is used as an exogenous instrument for the birth of a third child in the female labour supply equation. This paper shows that heterogeneity is likely to be important in the female labour supply function, and that failure to account for heterogeneity leads to exaggerated estimates of the negative effect of children on female labour supply. A similar effect in the female hours of work equation is also demonstrated.

New Economics Papers: this item is included in nep-ltv and nep-mic
Date: 2001-08-28
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