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Children and Their Parents' Labor Supply: Evidence from Exogenous Variation in Family Size
TL;DR: This paper used a new instrumental variable, the sex composition of the first two births in families with at least two children, to estimate the effect of additional children on parents' labor supply.
Abstract: Although theoretical models of labor supply and the family are well developed, there are few credible estimates of key empirical relationships in the work-family nexus. This study uses a new instrumental variable, the sex composition of the first two births in families with at least two children, to estimate the effect of additional children on parents' labor supply. Instrumental variables estimates using the sex mix are substantial but smaller than the corresponding ordinary least squares (OLS) estimates. Moreover, unlike the OLS estimates, the female labor supply effects estimated using sex-mix instruments appear to be absent among more educated women and women with high-wage husbands. We also find that married women who have a third child reduce their labor supply by as much as women in the full sample, while there is no relationship between wives' child-bearing and husbands' labor supply. Finally results to estimates produced using twins to generate instruments. Estimates using twins instruments are very close to the estimates generated by sex-mix instruments, once the estimators are corrected for differences in the ages of children whose birth was caused by the instruments. The estimates imply that the labor supply consequences of child-bearing disappear by the time the child is about 13 years old.
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TL;DR: In this paper, the authors investigated conditions sufficient for identification of average treatment effects using instrumental variables and showed that the existence of valid instruments is not sufficient to identify any meaningful average treatment effect.
Abstract: We investigate conditions sufficient for identification of average treatment effects using instrumental variables. First we show that the existence of valid instruments is not sufficient to identify any meaningful average treatment effect. We then establish that the combination of an instrument and a condition on the relation between the instrument and the participation status is sufficient for identification of a local average treatment effect for those who can be induced to change their participation status by changing the value of the instrument. Finally we derive the probability limit of the standard IV estimator under these conditions. It is seen to be a weighted average of local average treatment effects.
3,154 citations
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TL;DR: In this article, the authors developed estimation methods that use the amount of selection on the observables in a model as a guide to the amount that should be selected on the unobservables in order to identify the effect of the endogenous variable.
Abstract: We develop estimation methods that use the amount of selection on the observables in a model as a guide to the amount of selection on the unobservables. We show that if the observed variables are a random subset of a large number of factors that influence the endogenous variable and the outcome of interest, then the relationship between the index of observables that determines the endogenous variable and the index that determines the outcome will be the same as the relationship between the indices of unobservables that determine the two variables. In some circumstances this fact may be used to identify the effect of the endogenous variable. We also propose an informal way to assess selectivity bias based on measuring the ratio of selection on unobservables to selection on observables that would be required if one is to attribute the entire effect of the endogenous variable to selection bias. We use our methods to estimate the effect of attending a Catholic high school on a variety of outcomes. Our main conclusion is that Catholic high schools substantially increase the probability of graduating from high school and, more tentatively, college attendance. We do not find much evidence for an effect on test scores.
2,489 citations
TL;DR: In this article, the authors provide an overview of the methodological and practical issues that arise when estimating causal relationships that are of interest to labor economists, including identification, data collection, and measurement problems.
Abstract: This chapter provides an overview of the methodological and practical issues that arise when estimating causal relationships that are of interest to labor economists. The subject matter includes identification, data collection, and measurement problems. Four identification strategies are discussed, and five empirical examples – the effects of schooling, unions, immigration, military service, and class size – illustrate the methodological points. In discussing each example, we adopt an experimentalist perspective that emphasizes the distinction between variables that have causal effects, control variables, and outcome variables. The chapter also discusses secondary datasets, primary data collection strategies, and administrative data. The section on measurement issues focuses on recent empirical examples, presents a summary of empirical findings on the reliability of key labor market data, and briefly reviews the role of survey sampling weights and the allocation of missing values in empirical research. © 1999 Elsevier Science B.V. All rights reserved.
1,701 citations
TL;DR: Within marriage, fathers are spending more time with their children than in the past, perhaps increasing the total time children spend with parents even as mothers work more hours away from home.
Abstract: Despite the rapid rise in mothers’ labor force participation, mothers’ time with children has tended to be quite stable over time. In the past, nonemployed mothers’ time with children was reduced by the demands of unpaid family work and domestic chores and by the use of mother substitutes for childcare, especially in large families. Today employed mothers seek ways to maximize time with children: They remain quite likely to work part-time or to exit from the labor force for some years when their children are young; they also differ from nonemployed mothers in other uses of time (housework, volunteer work, leisure). In addition, changes in children’s lives (e.g., smaller families, the increase in preschool enrollment, the extended years of financial dependence on parents as more attend college) are altering the time and money investments that children require from parents. Within marriage, fathers are spending more time with their children than in the past, perhaps increasing the total time children spend with parents even as mothers work more hours away from home.
1,235 citations
TL;DR: In this paper, the authors explain the challenges associated with the Heckman (1979) procedure to control for selection bias, assess the quality of its application in accounting research, and offer guidance for better implementation of selection models.
Abstract: This study explains the challenges associated with the Heckman (1979) procedure to control for selection bias, assesses the quality of its application in accounting research, and offers guidance for better implementation of selection models. A survey of 75 recent accounting articles in leading journals reveals that many researchers implement the technique in a mechanical way with relatively little appreciation of important econometric issues and problems surrounding its use. Using empirical examples motivated by prior research, we illustrate that selection models are fragile and can yield quite literally any possible outcome in response to fairly minor changes in model specification. We conclude with guidance on how researchers can better implement selection models that will provide more convincing evidence on potential selection bias, including the need to justify model specifications and careful sensitivity analyses with respect to robustness and multicollinearity. Data Availability: Data used...
1,171 citations
References
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TL;DR: In this paper, a framework for causal inference in settings where assignment to a binary treatment is ignorable, but compliance with the assignment is not perfect so that the receipt of treatment is nonignorable.
4,129 citations
Posted Content•
TL;DR: In this paper, the authors investigated conditions sufficient for identification of average treatment effects using instrumental variables and showed that the existence of valid instruments is not sufficient to identify any meaningful average treatment effect.
Abstract: We investigate conditions sufficient for identification of average treatment effects using instrumental variables. First we show that the existence of valid instruments is not sufficient to identify any meaningful average treatment effect. We then establish that the combination of an instrument and a condition on the relation between the instrument and the participation status is sufficient for identification of a local average treatment effect for those who can be induced to change their participation status by changing the value of the instrument. Finally we derive the probability limit of the standard IV estimator under these conditions. It is seen to be a weighted average of local average treatment effects.
3,154 citations
TL;DR: In this article, the authors investigated conditions sufficient for identification of average treatment effects using instrumental variables and showed that the existence of valid instruments is not sufficient to identify any meaningful average treatment effect.
Abstract: We investigate conditions sufficient for identification of average treatment effects using instrumental variables. First we show that the existence of valid instruments is not sufficient to identify any meaningful average treatment effect. We then establish that the combination of an instrument and a condition on the relation between the instrument and the participation status is sufficient for identification of a local average treatment effect for those who can be induced to change their participation status by changing the value of the instrument. Finally we derive the probability limit of the standard IV estimator under these conditions. It is seen to be a weighted average of local average treatment effects.(This abstract was borrowed from another version of this item.)
2,940 citations
TL;DR: This paper found that the season of birth is related to educational attainment and earnings, and that roughly 25 percent of potential dropouts remain in school because of compulsory schooling laws. But, they did not study the effect of compulsory attendance laws on educational attainment.
Abstract: We establish that season of birth is related to educational attainment because of school start age policy and compulsory school attendance laws. Individuals born in the beginning of the year start school at an older age, and can therefore drop out after completing less schooling than individuals born near the end of the year. Roughly 25 percent of potential dropouts remain in school because of compulsory schooling laws. We estimate the impact of compulsory schooling on earnings by using quarter of birth as an instrument for education. The instrumental variables estimate of the return to education is close to the ordinary least squares estimate, suggesting that there is little bias in conventional estimates. Every developed country in the world has a compulsory schooling requirement, yet little is known about the effect these laws have on educational attainment and earnings.1 This paper exploits an unusual natural experiment to estimate the impact of compulsory schooling laws in the United States. The experiment stems from the fact that children born in different months of the year start school at different ages, while compulsory schooling laws generally require students to remain in school until their sixteenth or seventeenth birthday. In effect, the interaction of school-entry requirements and compulsory schooling laws compel students born
2,475 citations
TL;DR: This article found that married women have lower hourly earnings than married men with the same market human capital, and they economize on the effort expended on market work by seeking less demanding jobs.
Abstract: Increasing returns from specialized human capital is a powerful force creating a division of labor in the allocation of time and investments in human capital between married men and married women. Moreover, since child care and housework are more effort intensive than leisure and other household activities, married women spend less effort on each hour of market work than married men working the same number of hours. Hence, married women have lower hourly earnings than married men with the same market human capital, and they economize on the effort expended on market work by seeking less demanding jobs. The responsibility of married women for child care and housework has major implications for earnings and occupational differences between men and women.
2,190 citations