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3 Angrist-Evans1998
3 Angrist-Evans1998
3 Angrist-Evans1998
Children and Their Parents' Labor Supply: Evidence from Exogenous Variation in Family Size
Author(s): Joshua D. Angrist and William N. Evans
Source: The American Economic Review, Vol. 88, No. 3 (Jun., 1998), pp. 450-477
Published by: American Economic Association
Stable URL: http://www.jstor.org/stable/116844 .
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noted in two recent literature surveys, how- men and women. Our main contributionis the
ever, the interpretationof these correlationsre- use of a new instrumentalvariables (IV) strat-
mains unclear. In his assessment of the egy based on the sibling sex mix in families
"economics of the family," Robert J. Willis with two or more children. This instrumentex-
(1987 p. 74) writes, "... it has proven difficult ploits the widely observed phenomenon of pa-
to find enough well-measured exogenous vari- rental preferences for a mixed sibling-sex
ables to permit cause and effect relationships composition. In particular,parentsof same-sex
to be extracted from correlations among fac- siblings are significantly and substantially
tors such as the delay of marriage, decline of more likely to go on to have an additional
childbearing,growth of divorce, and increased child.4 Because sex mix is virtually randomly
female labor force participation ... ." Martin assigned, a dummy for whether the sex of the
Browning (1992 p. 1435) expresses similar second child matches the sex of the first child
views: "... althoughwe have a numberof ro- provides a plausible instrument for further
bust correlations, there are very few credible childbearing among women with at least two
inferences that can be drawn from them." 2 children. Moreover, in spite of the fact that the
Skepticism regarding the causal interpreta- sibling sex mix is obviously a function of the
tion of associations between fertility and labor sex of both children, we present a range of
supply arises in part from the fact that there evidence which suggests thatthere is little pos-
are strong theoretical reasons to believe that sibility that any secular impact of the sex of
fertility and labor supply are jointly deter- offspring contaminates the IV estimates.
mined (see, e.g., Schultz, 1981, or Goldin, We also compareresults generatedusing sex
1990). In fact, this endogeneity is reflected in mix as an instrumentto results generatedusing
the academic research agenda. On one hand, twins to construct instruments. Twinning at
papers on labor supply often treat child-status firstbirthhas been used in a inumberof previous
variables as regressors in hours of work equa- studies to estimate the relationship between
tions, while on the other hand, economic
demographers and others discuss regressions
and models that are meant to characterizethe
impact of wages or measures of labor-force timating such a model, the labor economist veers
attachmenton fertility. Since fertility variables dangerously close to a theory of householdforma
cannot be both dependent and exogenous at tion, childbearing, and labor supply; namely, that
household formation and fertility can be safely
the same time, it seems unlikely that either sort taken as exogenous with respect to a woman's sup-
of regression has a causal interpretation.: ply of hours."
This paper focuses on the causal link run-
ning from fertility to the work effort of both Many of the papers cited in the Handbook chapter on fe-
male labor supply (Mark R. Killingsworth and Heckman,
1986) fit this description. A widely cited paper that dis-
cusses regressions of fertility measures on measures of
earnings is Jacob Mincer (1963). A more recent example
ply is discussed by, among others, Orley Ashenfelter and is Heckman and James R. Walker (1990), who use non-
James J. Heckman (1974), Heckman and Thomas E. linear techniques. See also Schultz (1981 p. 171) who
MaCurdy (1980), and Jonathan Gruber and Julie Berry asks: "What is cause and what is effect?" in a discussion
Cullen (1996). of William P. Butz and Michael P. Ward (1979), and
2The survey by Alice Nakamuraand Masao Nakamura other demographicstudies of the relationshipbetween fer-
(1992) argues that a search for exogenous variation is so tility and labor-force participation.
difficult it is not even fruitful (pp. 60-61). 4 Charles F. Westoff et al. ( 1963 ) were amonigthe first
' In the chapter on models of marital status and child- to report preferences for a mix. In a survey of desired
bearing in the Handbook of Labor Economics, Mark R. fertility and a follow-up study of actual fertility among
Montgomery and James Trussel (1986 p. 205) note: couples with two children, they found that parents of two
boys or two girls both desired and ultimately had more
"One of the rites of passage for a labor economist children than parents of mixed pairs. See Nancy E.
involves the estimation of a Probit model for fe- Williamson (1976) for an international review. After
male labor force participation.It is standardprac- completing the first draft of this paper in July 1996, we
tice for the Probit equation to include some learned of concurrent work using sex-preference instru-
indicators for a woman's marital status and the ments to estimate the effect of fertility on female labor
number and age distributionof her children. In es- supply in the United Kingdom (Maria Iacovou, 1996).
Notes: The 1970 PUMS data are from the 1/100 state file. The 1980 and 1990 (lata are
from the 5-percent PUMS. Calculations from the 1990 PUMS use sample weights. The
marriedsamples include women marriedat the time of the Census.
our tabulations of the June 1990 CPS show The empirical analysis is conducted on
that over half of all women aged 28-35 fall two subsamples from each Census data set.
into this group. The proportion is lower for The first includes all women with two or
women aged 21-27 but still includes at least
one-quarterof the entire age cohort.6
1990 occurred at parities greater than 2. Our tabulations
of 1970 and 1990 Census data show that about 71 percent
of women aged 40-55 in both years had two or more
6 It is also worth noting that a substantial fraction of children. The proportion having three or more children,
the change in completed family size between 1970 and however, fell from about 0.47 in 1970 to 0.39 in 1990.
7 One reason estimates are presentedfor the full sample 8 Of the 3,356 multiple second births in the all-women
as well as for the married sample is that conditioning on sample, only 23 were triplets or higher-plurality births.
marital status raises the possibility that selection bias af- Therefore, we use the terms multiple births and twins
fects estimates in the selected sample. interchangeably.
More than 2 children (= 1 if mother had more than 2 0.402 0.381 - 0.375 0.367 -
children, =0 otherwise) (0.490) (0.486) (0.484) (0.482)
Boy Ist (sI) (= 1 if first child was a boy) 0.511 0.514 - 0.512 0.514 -
(0.500) (0.500) (0.500) (0.500)
Boy 2nd (S2) (= I if second child was a boy) 0.511 0.513 - 0.511 0.512 -
(0.500) (0.500) (0.500) (0.500)
Two boys (= 1 if first two children were boys) 0.264 0.266 - 0.264 0.265 -
(0.441) (0.442) (0.441) (0.441)
Two girls (= 1 if first two children were girls) 0.242 0.239 - 0.241 0.239 -
(0.428) (0.427) (0.428) (0.426)
Same sex (= 1 if first two children were the same sex) 0.506 0.506 - 0.505 0.503 -
(0.500) (0.500) (0.500) (0.500)
Age atfirst birth (parent's age in years when first child 20.1 20.8 24.0 21.8 22.4 25.1
was born) (2.9) (2.9) (4.0) (3.5) (3.5) (4.7)
Workedfor pay (= 1 if worked for pay in year prior to 0.565 0.528 0.977 0.662 0.667 0.968
census) (0.496) (0.499) (0.150) (0.473) (0.471) (0.175)
Weeksworked (weeks worked in year prior to census) 20.8 19.0 48.0 26.2 26.4 47.1
(22.3) (21.9) (10.5) (22.9) (22.9) (12.0)
Hours/week (average hours worked per week) 18.8 16.7 43.5 22.5 22.2 44.0
(18.9) (18.3) (12.3) (19.1) (18.9) (13.3)
Labor income (labor earnings in year prior to census, in 7,160 6,250 38,919 9,550 9,616 36,623
1995 dollars) (10,804) (10,211) (25,014) (13,071) (13,238) (30,283)
Family income (family income in year prior to census, in 42,342 47,646 - 42,558 49,196
1995 dollars) (26,563) (25,821) (34,692) (34,740)
Notes: The samples include women aged 21-35 with two or more children except for women whose second child is less than a year old.
In the 1980 PUMS, the marriedwomen sample refers to women who were marriedat the time of their first birth, marriedat the time of the
survey, and marriedonce. In the 1990 PUMS, the marriedwomen are those marriedat the time of the Census.
income. The latter three variables are set to are measures of Family income and, for the
zero for those who did not work for pay during marriedsample, a variable called Non-wife in-
the year. The final two variables in the table come computed as family income minus the
wife's labor income.' The descriptive statistics The theoretical impact of sex mix on fertil-
show that women's labor-force participation ity can be captured in the standardquantity/
rates, weeks and hours worked, and age at first quality model of fertility, originally outlined
birth increased between 1980 and 1990. by Becker and Gregg H. Lewis (1973) and
Women's real (1995 dollar) earnings in- Becker and Nigel Tomes (1976), and ex-
creased substantially as well, especially for tended in detail by Rosenzweig and Wolpin
married women, while real Non-wife income ( 1980a). In these models, parents derive util-
declined. It should also be noted that the var- ity from the numberof children and a comple-
iances of earnings, husband's earnings, and mentary good, "child quality," which enters
family income increased substantially over the utility function and budget constraint in
this period. proportion to the number of children. Child
Finally, note that husband's age at firstbirth quality is generated through the purchase of
was calculated assuming that the husband is inputs and the expenditure of parents' time in
the father of the children in the household. All home production. Ben-Porath and Welch
of the husbands' variables are computed based ( 1980) describe the sex mix as something that
in this assumption, which seems plausible for determines child quality in quantity/quality of
the 1980 data since women in the 1980 mar- models. Alternately, the impact of sex prefer-
ried women sample were married only once ences can be modeled using state-dependent
and they were marriedat the time of their first utility. Suppose a mother already has n, 2 1
birth. Only 4.7 percent of the husbands in this children and she is trying to decide how many
sample were married before, and very few additionalchildren to have (n,). If parentspre-
children live with their fathers after divorce. fer a mixed sibling-sex composition, then a
On the other hand, the 1990 match is probably same-sex sibling composition reduces the
not as good as the 1980 match. We therefore utility from n . This in turnraises the marginal
confirmed the basic first-stage relationships utility of nc, increasing the chances that par-
used in this paper with June CPS data, which ents will try to have additionalchildren. Twin-
includes true retrospective fertility informa- ning can similarly be incorporated into this
tion. See the appendix to our earlier paper model as a shock to n, that cannot be fully
(Angrist and Evans, 1996a) using a Census offset by future fertility choices. For a more
household match for more on data problems detailed theoretical discussion, see our work-
and issues related to the match. ing paper (Angrist and Evans, 1996b).
Table 3 reports estimates of the impact of
B. Sex Mix and Fertility child sex and the sex mix on fertility similar
to those in Ben-Porathand Welch ( 1976). The
The phenomenon of parentalpreferencesfor first panel looks at sex preferences in families
a mixed sibling-sex composition has been doc- with one or more childrenby showing the frac-
umented in a number of studies. For example, tion of women with at least one child who had
Yoram Ben-Porath and Finis Welch (1976) a second child, conditional on the sex of the
found that in the 1970 Census, 56 percent of first child. The third row of this panel shows
families with either two boys or two girls had the difference by sex. In spite of the fact that
a third birth, whereas only 51 percent of fam- attitudinal surveys suggest many couples
ilies with one boy and one girl had a third would prefer more boys than girls, or prefer
child. their firstborn child to be male (see, e.g.,
Williamson, 1976), there is only one subsam-
ple (all women in the 1990 PUMS) where sub-
'In the few cases where there were negative or zero sequent fertility is a function of the sex of the
family-income values, we set the variables equal to one first child. Even in this case, the impact of the
when computing logs. Family income and person wage sex of the firstbornon fertility is very small.
and salary income are top coded at $75,000 in the 1980 The second panel of Table 3 documents the
Census. In the 1990 Census, family income is top coded
at $999,999 and individual wage and salary income is top relationship between the fraction of women
coded at $140,000, with state medians of top-coded values who have a third child and the sex of the first
substitutedfor the top code. two children. The first three rows from this
(2) one boy 0.512 0.694 0.511 0.667 0.515 0.720 0.513 0.699
(0.001) (0.001) (0.001) (0.001)
two girls 0.242 0.441 0.241 0.412 0.239 0.425 0.239 0.408
(0.002) (0.002) (0.002) (0.002)
two boys 0.264 0.423 0.264 0.401 0.266 0.404 0.264 0.396
(0.002) (0.002) (0.002) (0.002)
(1) one boy, one 0.494 0.372 0.495 0.344 0.494 0.346 0.497 0.331
girl (0.001) (0.001) (0.001) (0.001)
(2) both same sex 0.506 0.432 0.505 0.407 0.506 0.414 0.503 0.401
(0.001) (0.001) (0.001) (0.001)
Notes: The samples are the same as in Table 2. Standarderrorsare reportedin parentheses.
section show the sample characteristics of a third child, compared to 43.2 for women
women in the following groups: those with with two girls or two boys. The relationship
one boy and one girl, those with two girls, and between sex mix and the probability of addi-
those with two boys. The next two rows report tional childbearing is even larger for married
estimates for women with two children of the women, reaching a precisely estimated 7-
same sex and for women with one boy and one percentage-point difference in the 1990 Cen-
girl. The final row reports the differences be- sus. This is approximately 21 percent of the
tween the same-sex and mixed-sex group rate of additional childbearing among women
averages. with one boy and one girl.. Finally, we note
Both data sets and samples suggest that that the relationship between sex mix and
women with two children of the same sex are childbearingis confirmed in data from the fer-
much more likely to have a thirdchild than the tility supplements to the June 1980, 1985, and
mothers of one boy and one girl. For example, 1990 CPS. This is important because, unlike
in the 1980 all-women sample, only 37.2 per- the Census where information about children
cent of women with one boy and one girl have is partly based on our household match, the
June CPS contains detailed fertility histories Let zi denote the binary instrument,Same sex.
for each woman, including informationon the The IV estimate of /3 in this equation is
dates of birth and sex of each child.
The virtual random assignment of Same sex (2) 3v =(57 - 0)/(x --o),
makes it very likely that reduced-form re-
gressions of fertility and labor-supply out- where y,i is the mean of y, for those observa-
comes on the instruments have a causal tions with zi = 1 and other terms are similarly
interpretation.One simple check on this claim defined. The numeratorand denominatorcap-
is to compare the demographic characteristics ture the reduced-formrelationshipsbetween yi
of people who have same-sex and mixed-sex and zi and between xi and zi. The IV method
sibling compositions. Table 4 reports Same attributesany effect of zi on yi to the effect of
sex contrasts for mother's age, age at first zi on xi.
birth, race, ethnicity, and years of education Although equation (1) is written as a bivar-
in the 1980 and 1990 all-women samples. iate regression with constant coefficients,
Even in these large samples, none of the con- Guido W. Imbens and Angrist (1994) have
trasts is significantly different from zero at shown that ilv can be interpreted as a local
the 5-percent level. The magnitude of the dif- average treatmenteffect specific to the instru-
ferences by Same sex is also very small. For ment, zi. In this case, 3lvestimates the average
example, the difference of -0.0028 for years effect of xi on yi for individuals whose feltility
of education in 1980 represents 0.02 percent has been affected by their children's sex mix.
of the sample mean years of schooling, which Similarly, when zi is an indicator of multiple
is about 13. births at the second pregnancy, Twins-2, the
In contrast with the small and insignificant IV estimates reflect the effect of children on
differences in demographic characteristics labor supply for those who have had more
by Same sex, there are some large and pre- children than they otherwise would have be-
cisely estimated differences in mean demo- cause of twinning. For this reason, the Twins-2
graphic variables by twin status. The and Same sex instruments do not necessarily
estimates in the final column of Table 4 rep- identify the same average effect.
licate the well-known result that twins are The first six columns of Table 5 report the
more likely for older women (John A. H. components of 6lv when Same sex is used as
Waterhouse, 1950) and for blacks (Ntinos the instrumentin the all-women samples from
Myrianthopoulos, 1970). Women with more the 1980 and 1990 PUMS. The last three col-
years of schooling are also more likely to umns report corresponding results from the
have twins, although this probably reflects 1980 PUMS using the Twins-2 instrument.
more childbearing at older ages among more The first two rows of the table show the de-
educated women. nominatorof the Waldestimate,x -
lX, for
two possible choices of xi. One is an indicator
II. Fertilityand LaborSupply for having had a third child, More than 2 chil-
dren. The other is total Number of children.
A. Wald Estimates The effect of the Same sex instrumenton More
than 2 children, equal to the difference in
Because sibling-sex composition is virtually means reported at the bottom of Table 3, is
randomly assigned, simple statistical tech- 0.06 in 1980 and 0.063 in 1990. The effect of
niques can be used to illustrate how the sex- Same sex on Number of children is 0.077 in
mix IV strategy identifies the effect of fertility 1980 and 0.084 in 1990. The effect of Twins-
on parents' labor supply. Consider the bivari- 2 on the probability of having a third birth in
ate regression model, 1980 is 0.60, and the effect of Twins-2 on
Number of children is 0.81.
(1) yi = a +fxi + si Below the estimates of xi - x0, columns
(1) and (4) of Table 5 report y, - 5o for
where yi is a measure of labor supply and xi alternative outcomes using the Same sex in-
is the endogenous fertility measure of interest. strument. These results show that in addition
Notes: The samples are the same as in Table 2. Standarderrorsare reportedin parentheses.
to having more children than women with The last three columns in the table show that
one boy and one girl, women with two chil- women whose second pregnancy resulted in
dren of the same sex have a lower probability twins are also less likely to work. With the ex-
of working, work fewer weeks per year and ception of the estimate for family income,
fewer hours per week, and have lower annual which is not very precise, the Wald estimates
earnings and lower family income. All but generatedby Twins-2, reportedin column (6),
the final result is statistically significant in are lower than the Wald estimates based on
both Census years. Same sex. In Section III, we explore the com-
The Wald estimates for 1980 calculated by parison between Same sex and Twins-2 esti-
dividing 5Yj- Y3o by XI - io when xi is More mates further and show how they can be
than 2 children imply that having more than reconciled.
two children reduced labor supply by 13.3 As with the Same sex estimates, Twins-2 es-
(-0.008/0.06) percentage points, weeks timates in per-child termrs are necessarily
worked by about 6.4 weeks, hours of work per smaller than estimates treating the indicator
week by 5.2, and labor income by just over More than 2 children as the endogenous re-
$2,200 per year. The results for 1990 are also gressor. But the factor of proportionalitycon-
negative, though (with the exception of family necting the per-child and More than 2 children
income) somewhat smaller. The Wald esti- estimates using Twins-2 is also 0.75. It there-
mates calculated using the effect of Same sex fore makes little difference which denominator
on total Numberof children put these effects in is used because estimates based on More than
per-child terms. In per-child terms, the esti- 2 children can always be converted into per-
mates are about 0.78 as large in 1980 and 0.75 child estimates by multiplying by ).75. We
as large in 1990 as the estimates producedwith chose to discuss estimates treatingMore than 2
More than 2 children in the denominator. children as the endogenous regressorin the re-
Workedfor pay -0.0080 -0.133 -0.104 -0.0053 -0.084 -0.063 -0.0459 -0.076 -0.057
(0.0016) (0.026) (0.021) (0.0015) (0.024) (0.018) (0.0086) (0.014) (0.011)
Weeks worked -0.3826 -6.38 -5.00 -0.3233 -5.15 -3.87 -1.982 -3.28 --2.45
(0.0709) (1.17) (0.92) (0.0743) (1.17) (0.88) (0.386) (0.63) (0.47)
Hours/week -0.3110 -5.18 -4.07 -0.2363 -3.76 -2.83 -1.979 -3.28 -2.44
(0.0602) (1.00) (0.78) (0.0620) (0.98) (0.73) (0.327) (0.54) (0.40)
Labor income -132.5 -2208.8 -1732.4 --119.4 -1901.4 -1428.0 -570.8 -946.4 -705.2
(34.4) (569.2) (446.3) (42.4) (670.3) (502.6) (186.9) (308.6) (229.8)
ln(Family -0.0018 -0.029 -0.023 -0.0085 -0.136 -0.102 -0.0341 -0.057 -0.042
income) (0.0041) (0.068) (0.054) (0.0047) (0.074) (0.056) (0.0223) (0.037) (0.027)
Notes: The samples are the same as in Table 2. Standarderrorsare reportedin parentheses.
mainder of the paper because this emphasizes involving the sex of the first two children, and
the fact that the fertility increment induced by thereforepotentially correlatedwith the sex of
either instrumentis a move from two to more either child. To see this, let s1 and S2 be indi-
than two children. cators for male firstbornand second-bornchil-
dren. The instrumentcan be written as
B. Two-Stage Least-Squares Estimation
(3) Same sex =S1S2 + (1 - si)(l - S2)
While the Wald estimates provide a simple
illustrationof how the instrumentsidentify the Assuming that child sex is independent and
effect of children on labor supply, the rest of identically distributed (i.i.d.) over children,
the paper discusses two-stage least-squares the population regression of Same sex on ei-
(2SLS) and ordinaryleast-squares (OLS) es- ther sj produces a slope coefficient equal to
timates of regression models relating labor- 2E[sj] - 1, which is zero only if E[sj] = 1/2.1
market outcomes to fertility and a variety of Since the probability of giving birth to a male
exogenous covariates. 2SLS estimation allows child is 0.51, there is a slight positive associ-
us to accomplish three things. First, even if ation between Same sex and the sex of each
there is no association between the instrument child. This correlation is a concern only if sj
and exogenous covariates, as suggested by Ta-
ble 4, controlling for exogenous covariates can
lead to more precise estimates if the treatment
10
effects are roughly constant across groups. Proof: Assuming child sex is i.i.d., we have E[si ] =
Second, we can use 2SLS to control for any E[S2] and E[s1s2] = E [j]2 . Therefore, Cov(Same sex,
secular additive effects of child sex when us- sj) = E[sj](E[sj] - E[Same sex]). Some manipulation
gives E[sj] - E[Same sex] = (1 - E[sj])(2E[sj] - 1).
ing Same sex as an instrument. This is desir- Since the variance of sj is E [sj] (l -E[sj] ), the regression
able because Same sex is an interaction term coefficient is (2E [sj] - 1).
affects labor supply for reasons other than where wi is a vector of demographicvariables,
family size. Such effects could arise if the sex and sli and s2i are indicators for the sex of the
of offspring affects the father's commitment first two children of mother i. Initially, wi is
to the family (see, e.g., Philip S. Morgan et al., limited to variables that are clearly exogenous
1988) or changes the way parents treat their to fertility: mother's age and age at first birth,
children (Kristin F. Butcher and Anne Case, plus race and Hispanic indicators. In the just-
1994; Duncan Thomas, 1994). Secular effects identified model where Same sex is the only
of sex mix on labor supply could also be gen- instrument, the first-stage equation relating
erated by the fact that boys are more likely More than 2 children to sex mix is
than girls to have disabilities (see, e.g., Angrist
and Victor Lavy, 1996) since having a dis- (5) Xi = i- oWi + 7lSli + 72S2i
abled child might change parents' behavior.
Adding s, and S2as regressorsto the estimating + y(Same sexi) + Tij,
equations reduces the likelihood of omitted-
variables bias from these sources. where y is the first-stage effect of the
Of course, controls for additive effects can instrument.
only eliminate bias from omitted variables The alternative identification strategy uses
with effects that are additive in the number of the two components of Same sex-lwo boys
children. However, a third advantage of the and Two girls-as instrumentsfor More than
2SLS frameworkis that it allows us to exploit 2 children. In this case, however, either sli or
the fact that the Same sex instrument can be S2imust be dropped from the list of covariates
decomposed into two instruments, leading to because sli, s2i, SIiS2i, and (1 - sli)(1 - S2i)
an overidentified model. In particular,the sep- are linearly dependent. We chose to drop S2i
arateindicators, Two boys [SS2] and Two girls (the results are not sensitive to this choice, or
[(1 - s)( -s2) ], are both available as po- to the elimination of both sIi and s2i, as we
tential instruments.This is useful because bias show below). In this case, the equation of in-
from any secular effects of child sex on labor terest becomes
supply should be different for these two in-
struments, while the labor-supply conse- (6) yi = cawi + a1sli + /ixi + si.
quences of childbearing seem likely to be
independent of whether Same sex equals Two The first-stagerelationship between xi and sex
boys or Two girls. A natural specification test mix is
is therefore the conventional instrument-error
overidentification test statistic for 2SLS esti-
mation using both instruments, since this is the
(7) xi = ir'wi + ir1s1i+ yo(Two boysi)
same as a test for whether the Two boys and
Two girls instruments give the same estimate + y1(Two girlsi ) + Tj,
when used separately."
The following regression models are used where Two boysi = S1iS2i and Two girlsi =
to link labor-supplyvariablesfor husbandsand (1 - Sli)(l - S2i).
wives to the endogenous More than 2 variable,
xi, and the list of exogenous covariates, in- C. 2SLS Results
cluding additive effects for the sex of each
child: The first-stage results linking sex mix and
fertility are reported in Table 6. In the top
half of the table, we report results from the
(4) yi = ?awi + a1sli + a2s2i + f3xi + -1,
1980 PUMS. These estimates show that
women in 1980 with same-sex children are
estimated to be 6.2 percentage points more
" See Whitney K. Newey and Kenneth D. West (1987) likely to have a third child in a model with
for this interpretationof overidentification tests. Angrist covariates. The corresponding estimate for
( 1991 ) discusses the dummy instrumentcase. married women is 6.9 percent. The
1990 PUMS
Boy Ist -0.0081 -0.0083 -0.0097 -0.0086
(0.0015) (0.0022) (0.0017) (0.0024)
Notes: Other covariates in the models are indicators for Age, Age at first birth, Black, Hispanic, and Other race. The
variable Boy 2nd is excluded from columns (3) and (6). Standarderrors are reportedin parentheses.
t-statistics for these first-stage effects are data is explained entirely by the difference in
well over 30. As in Table 3, the estimates for the effect of Two boys and Two girls when
the 1990 PUMS (reported in the lower half these regressors are entered separately. In
of Table 6) are somewhat larger in both the other words, when the effects of sex mix are
full and married women samples. allowed to differ by sex, there is no relation-
Table 6 also provides some evidence of ain ship between Boy Ist and fertility, althoughthe
association between having a male child and effect of Same sex on fertility in 1980 is larger
reduced childbearing at higher parities. Note, for boys than for girls. The Boy Ist effects for
however, that the effect of Boy Ist in the 1980 1990 remain significant in all specifications,
but they are very small, especially in compar- ply and earnings. One imiportantfinding is
ison to the effects of the sex mix. that estimates using Same sex as an instru-
Next, we use the sex mix to estimate the ment are smaller than the corresponding
effect of More than 2 children on measures of OLS estimates. This is true for the labor-
employment and earnings in 1980. Table 7 re- supply estimates in the married women's
ports a set of OLS estimates and two sets of sample as well, although here the gap be-
2SLS estimates using Same sex and the pair of tween 2SLS and OLS estimates is not as
dummies Two boys and Two girls as instru- large. Overall, however, the OLS estimates
ments. The exogenous regressors are the same appear to exaggerate the causal effect of fer-
as in Table 6 (coefficients not reported). In tility on female labor supply.
models that use Two boys and Two girls as It is also worth noting that the relationship
instruments,we dropped the Boy 2nd variable between the OLS and 2SLS estimates is sim-
from the list of covariates. The first three col- ilar when the estimates are converted into per-
umns show results for the full sample, the next child units. Above, we noted that 2SLS esti-
three columns show results for married mates treatingMore than 2 children as the en-
women, and the last three columns show re- dogenous regressor should be multiplied by
sults for the husbands of marriedwomen. about 0.75 to obtain estimates in per-child
OLS estimates in both the full and married terms (i.e., with Number of children as the en-
women sample suggest that the presence of a dogenous regressor). It turns out that the OLS
third child reduces the probability of working estimates can be converted into per-child units
by about 17 percentage points, and causes by multiplying by about 0.7 using either 1980
weeks worked to fall by about 8-9 per year, or 1990 data. Thus, regardless of whether the
hours per week to fall by 6-7, and family in- estimates are cast in terms of the effect of hav-
come to fall by about 13 percent. OLS esti- ing more than two children or in per-child
mates of earnings effects are $3,166 in the units, the OLS estimates are considerably
marriedsample and $3,768 in the full sample. smaller than the 2SLS estimates.
Not surprisingly, all of these OLS estimates In addition to differing from the OLS esti-
are very precisely estimated. mates, the estimates using Same sex as an in-
In contrastwith the results for women, OLS strunmentalso differ from most of the 2SLS
estimates of the effect of More than 2 children estimates previously reported in the literature
on husbands' labor supply are small. Having on children and labor supply. In his review
a third child is estimated to reduce the proba- article, Browning (1992 p. 1469) notes that,
bility a husband worked for pay by less than "There is one salient difference between stud-
one percentage point. The impact of a third ies that take fertility as exogenous and those
child on other measures of husbands' labor that take it as endogenous. [n many of the latter
supply is also small, though precise enough to it is found that fertility either has no effect
be significantly different from zero. The esti- on labor supply ... or it has a positive effect."
mated effect on annualweeks worked is -0.90 Browning also points out that it is not clear
and the estimate for hours per week is 0.25. from these estimates whether children really
The effect on husbands' earnings appearssub- have no effect on female labor supply, or
stantial (-$1,506), but this amount is still whether the instruments are too weak or
only about 3.9 percent of the average earnings simply poorly chosen. While the 2SLS esti-
of men in the sample, mates generated by Same sex are smaller than
The first set of 2SLS estimates uses Same the corresponding OLS estimates, they are
sex alone as an instrument. In the full sam- still negative, precise, and of a plausible
ple, the estimates (standard errors) for the magnitude.
dependent variables Workedfor pay, Weeks In contrast to the female labor-supply esti-
worked, Hours/week, and Labor income mates, there is little evidence of a relationship
models are-0.12 (0.025), -5.7 (1.1 ), -4.6 between having a third child and family in-
(0.95), and -1,961 (542). These results come. Given the strong labor-supply effects,
suggest that having a third child causes a 20- the weak impact on family income may seem
30-percent reduction in women's labor sup- surprising.Therearea few potentialexplanations
for this result. First, the lost income due to a wages. This result may also be attributableto
reduction in mothers' labor supply could be the fact that married women are delaying
made up by other family members. The small childbearing (average age at first birth in-
and statistically insignificant 2SLS estimates creased from 20.8 in 1980 to 22.4 in 1990 for
in the ln(Non-wife income) equations suggest this group), and therefore they have more
that this is not the case. The most likely ex- years of experience and higher wages when
planation is that the instrumentis not powerful they exit the workforce due to childbirth.
enough to detect the family-income conse- Table 6 shows that mothers of two girls are
quences of childbearing. For example, in the more likely than mothers of two boys to have
marriedwomen sample, the thirdchild reduces a thirdchild. So the first-stagerelationshipdif-
female earnings by about 21 percent and fe- fers for these two instruments. However, the
male labor income is (on average) 13 percent 2SLS estimates in Tables 7 and 8 show that
of total family income. If the third child does the additional predictive power provided by
not alter husbands' labor supply, we would ex- separating the two components of Same sex
pect an estimated effect of More than 2 chil- does not change the coefficient estimates very
dren in the ln(Family income) equations of much or lead to an appreciableincrease in pre-
roughly -0.21 X 0.13 = -0.027, which is cision using either the 1980 or 1990 data.
close to the reported estimate of -0.05. But We noted above that the overidentification
the standarderror for this estimate is slightly test statistic associated with the use of Two
higher than 0.05, so that impacts this small boys and Two girls as instrumentsjointly tests
cannot be precisely measured. for a difference between 2SLS estimates com-
Gronau (1977 p. 1102) reports results sug- puted using only Two boys and 2SLS estimates
gesting that husbands increase their work ef- computed using only Two girls. The p-values
fort in response to an increase in family size. for this test are reported in square brackets in
Table 7 also reports estimates of the impact of both Tables 7 and Table 8. The p-values for
the third child on husbands' labor supply in the 1990 estimates suggest that it does not mat-
the 1980 married sample. While the OLS es- ter which instrumentis used. In fact, the 2SLS
timates show a small but significant (negative) estimates using Two boys and Two girls in
relationship between husbands' labor supply 1990 are remarkablyclose. On the other hand,
and additional childbearing, estimates con- the 1980 2SLS estimates are consistently
structedusing Same sex as an instrumentgen- smaller when Two girls alone is used as the
erate no evidence of any effects on the labor instrument. Moreover, some of the p-values
supply of men. The standard errors on the for estimates computed using 1980 data indi-
2SLS estimates for husbands' variables cate a significant contrast between the Two
Workedfor pay, Weeks worked, and Hours! girls and Two boys instruments, although no
week are actually smaller than the correspond- marginal significance level is below 1 percent.
ing standard errors for women, and they are As in the 1990 data, however, in the 1980 data
small enough so that modest positive or neg- both instruments are always associated with
ative effects could be detected if they existed. more children and reduced labor supply.
The labor-supply effects estimated using
1990 data are remarkablysimilar to those es- D. Other Specification Issues
timated for 1980. This can be seen in Table 8,
which reports OLS estimates and 2SLS esti- Other specification issues considered here
mates for 1990 using Same sex and Two boys include the robustness of the results, the gen-
and Two girls as instruments. Some of the es- erality of the results, and the validity of the
timated effects are slightly smaller in 1990 instruments. Because sex mix is essentially
than in 1980, but these differences are not sta- randomly assigned, the results reported in
tistically meaningful. One difference between Tables 7 and 8 are unchanged by altering the
the 1980 and 1990 results that does seem note- basic set of covariates. For example, using
worthy is the larger negative impact of child- data for married women from the 1980
bearing on marriedwomen's earnings in 1990, PUMS, we estimated models adding the fol-
perhaps because of an increase in women's lowing covariates to the vector wi: linear and
Instrumentfor More than - Same sex Two boys, - Same sex Two boys, - Same sex Two boys,
2 children Two girls Two girls Two girls
Dependent variable:
Workedfor pay -0.176 -0.120 -0.113 -0.167 -0.120 -0.113 -0.008 0.004 0.001
(0.002) (0.025) (0.025) (0.002) (0.028) (0.028) (0.001) (0.009) (0.008)
[0.013] [0.013] [0.013]
Weeksworked -8.97 -5.66 -5.37 -8.05 -5.40 -5.16 -0.82 0.59 0.45
(0.07) (1.1 1) (1.10) (0.09) (1.20) (1.20) (0.04) (0.60) (0.59)
[0.017] [0.071] [0.0301
Hours/week -6.66 -4.59 -4.37 -6.02 -4.83 -4.61 0.25 0.56 0.50
(0.06) (0.95) (0.94) (0.08) (1.02) (1.01) (0.05) (0.70) (0.69)
[0.030] [0.049] [0.71]
Labor income -3768.2 -1960.5 -1870.4 -3165.7 -1344.8 -1321.2 -1505.5 -1248.1 -1382.3
(35.4) (541.5) (538.5) (42.0) (569.2) (565.9) (103.5) (1397.8) (1388.9)
[0.126] [0.703] (0.549)
Notes: The table reportsestimates of the coefficient on the More than 2 children variablein equations (4) and (6) in the text. Othercovariates
in the models are Age, Age at first birth, plus indicators for Boy 1st, Boy 2nd, Black, Hispanic, and Other race. The variable Boy 2nd is
excluded from equation (6). The p-value for the test of overidentifying restrictions associated with equation (6) is showli in brackets.
Standarderrorsare reportedin parentheses.
Instrumentfor More Same sex Two boys, - Same sex Two boys, -- Same sex Two boys,
than 2 children Two girls Two girls Two girls
Dependent variable:
Workedfor pay -0.155 -0.092 --0.092 -0.147 -0.104 -0.104 -0.102 0.017 0.017
(0.002) (0.024) (0.024) (0.002) (0.024) (0.024) (0.001) (0.009) (0.009)
[0.743] [0.576] [0.989]
Weeksworked -8.71 -5.66 -5.64 -8.25 -5.76 --5.76 -1.03 1.01 1.01
(0.08) (1.16) (1.16) (0.09) (1.15) (1.15) (0.05) (0.63) (0.63)
[0.391] [0.670] [0.708]
Hours/week -6.80 -4.08 --4.10 -6.39 -3.94 -3.95 -0.06 0.85 0.83
(0.07) (0.98) (0.98) (0.07) (0.96) (0.96) (0.05) (0.69) (0.69)
[0.489] [0.665] [0.180]
Labor income -3984.4 -2099.6 -2096.2 -3753.9 -2457.5 -2456.3 929.7 1348.7 1354.8
(44.2) (664.0) (663.8) (50.7) (669.7) (669.7) (114.9) (1536.0) (1535.9)
[0.830] [0.893] [0.7111
Notes: The table reportsthe coefficient on the More than 2 children variablein equations (4) and (6) in the text estimated with 1990 Census
data. Other covariates in the models are Age, Age atfirst birth, plus indicatorsfor Boy Ist, Boy 2nd, Black, Hispanic, and Other race. The
variableBoy 2nd is excluded from equation (6). The p-value for the test of overidentifying restrictionsassociated with equation (6) is showr
in brackets.Standarderrorsare reportedin parentheses.
The sample was restricted to women under ditive effects of sI and s2. This specification
the age of 35 because nearly all children born was motivated by a concern with the validity
to women in this age-group are still at home. of the instruments and possible omitted vari-
Relaxing this restriction, a greater fraction of ables bias. It is useful to know whether the
women with two or more children are lost be- control for these additive effects is important
cause the oldest child is increasingly unlikely because if it is, identificationturnson our abil-
to be at home. We note, however, that the re- ity to distinguish additive effects from the in-
sults are not very sensitive to this sample- teraction term. Moreover, when using Two
selection rule. For example, expanding the boys and Two girls as separateinstruments,we
age-group to include women up to age 45 in must drop one of the additive effects. As it
the 1980 data, the sample size increases to turns out, the 2SLS estimates are virtually in-
552,606 observations. The resulting 2SLS es- variant to the inclusion of regressors that con-
timate (standard error) of the effect of the trol for the sex of each child.'3The coefficients
More than 2 children variable in the Worked (standard errors) on the More than 2 children
fbr pay model is -0.096 (0.021) in the all- variable in the Workedforpay, Weeksworked,
women sample.
A final point is that because Same sex is an
interaction term, the 2SLS estimates were 'I The Wald estimates in Table 5 also constitute 2SLS
computed using a model that controls for ad- estimates with no controls for main effects.
and Hours/week equations change by no more We use the Same sex instrumentto explore
than 2 percent. There is also little evidence of the question of how the labor-marketconse-
an association between having male children quences of childbearing varies with the earn-
and labor supply. The only significant sex ef- ings or earnings potential of husbands and
fects are for s2 in the 1980 sample, but these wives. Panel A of Table 9 reports OLS and
are small."4 2SLS estimates of the effect of More than 2
children on married women, conditional on
E. Heterogeneity in the Impact of Children the position of their husbands in the husbands'
on Labor Supply earnings distribution.The first column shows
the first-stage relationship between More than
A number of theoretical models describe 2 children and Same sex, interactedwith dum-
how the impact of children on labor supply mies that indicate whether husbands' earnings
might vary with the wages or schooling of hus- are in the upper third, middle third, or lower
bands or wives. For example, Angrist and third of the earnings distribution. These esti-
Evans (1996b) outline a version of Gronau's mates show that the effect of Same sex on fer-
(1977) model of market work and home pro- tility is increasing in husbands' earnings. For
duction that incorporates child quality effects women with high-wage husbands, however,
of the sort discussed by Becker and Lewis 2SLS estimates of labor-supply effects are
(1973). This model predicts that higher own smaller and they are not significantly different
wages of either partner magnify the labor- from zero. Note that average participation
supply consequences of childbearing, al- rates do not decline enough with husbands'
though there are no cross-wage effects."5 earnings to account for the decline in the mag-
Gronau's survey paper (1986 p. 287) refers to nitude of the coefficients among women with
a number of empirical studies consistent with high-wage husbands. It is also worth noting
this prediction, showing that the labor supply that the OLS estimates do not decline nearly
of more educated women is more sensitive to as much with husbands' earnings as do the
the presence of children than the labor supply 2SLS estimates.
of less educated women. Earlier, Gronau It is not possible to analyze labor-supplyef-
(1973 p. S 170) reportedfinding that the effect fects conditional on women's wages because
of a child on his mother's value of time in- wages are unobservedfor women who do not
creases with the mother's education. On the work. But we can conditionon schooling, which
other hand, an assumptionimplicit in most em- is an importantpredictorof individualearings
pirical labor-supply models, where the focus potential.This is done in Panel B of Table 9 for
is on wage effects and not the consequences maried women in the 1980 sample with less
of childbearing,is thatthere are no interactions than a high-school education(18 percentof the
in the effect of wages and the number of chil- sample), high-school graduates(49 percent of
dren (see, e.g., Thomas A. Mroz, 1987). the sample), and more than a high-school edu-
cation (33 percentof the sample). The reduced
forms show a strong associationbetween Same
sex and fertility in each schooling group, al-
4 For example, the coefficient (standarderror) on Boy though the effect is about 1 percentage point
2nd in the Workedfor pay model is -0.0038 (0.0015). smallerfor mothersin the highest educationcat-
Estimates for this variable in the Weeks worked and egory. The 2SLS estimates suggest that women
Hours/week equations are -0.164 (0.069) and -0.127 with relatively low levels of schooling experi-
(0.059), respectively.
15 The explanation for this is that in equilibrium, the
ence the largesteffects of childrenon laborsup-
marginal returnsto an hour spent at home are higher for ply. In contrast, there is no statistically
high-wage people than for low-wage people. Although the significantassociationbetween additionalchild-
effects of children are generally ambiguous, in the Angrist bearingand labor supply for women with more
and Evans (1996b) model, increasing the numberof chil- than a high-school education.As with the esti-
dren increases time spent at home because of returns to
scale in parental time spent on child-rearing. Returns to mates that conditionon husbands'earnings,the
scale are larger when the marginal return to hours (and variationin 2SLS estimatesby schooling group
hence wages) are higher. differs from the variation in OLS estimates,
TABLE 9-2SLS ESTIMATES OF LABOR-SUPPLY MODELS WITH INTERACTION TERMS USING 1980 CENSuS DATA
More
than 2 Workedfor pay Weeks/year
children Mean of Mean of
First dependent dependent
Sample/variables stage variable OLS 2SLS variable OLS 2SLS
A. Results for wives by husband's earnings:
Bottom third of 0.057 0.570 -0.186 -0.122 21.1 -9.23 -7.55
husband's (0.003) (0.003) (0.060) (0.15) (2.60)
earnings
distribution
Wife > high-school 0.062 0.640 -0.184 -0.125 23.7 -9.07 -3.98
graduate (0.006) (0.006) (0.098) (0.28) (4.30)
D. Results for husbands by wife's education:
Wife < high-school 0.071 0.945 -0.014 -0.013 44.5 -1.36 -0.21
graduate (0.004) (0.001) (0.020) (0.10) (1.37)
Wife > high-school 0.063 0.987 -0.002 0.009 49.2 -0.23 0.25
graduate (0.003) (0.001) (0.016) (0.08) (1.14)
Notes: The table reportsestimates of the coefficient on More than 2 children in equation (4) in the text, modified to allow
interactionswith wives' schooling and husbands'educationas indicated.Main effects for each interactionvariable(husband's
earnings distributionand wife's education) are included in the equation. Other covariates in the models are those listed in
the notes to Table 7. Data arefrom the 1980 marriedwomen and husbandsamples.Standarderrorsarereportedin parentheses.
which show effects that increase in magnitude weeks workedis also significantlydifferentfrom
as schooling increases. zero for the husbandsof high-school graduates.
Because mothers' education and hus- These estimates suggest a possible change in
bands' wages are correlated, it is not clear husbands'labor-supplyresponseto childbearing
whether a set of estimates that condition on between 1980 and 1990, at least for some
husbands' earnings and a set of estimates groups. On the other hand, the 1990 husband
that condition on mothers' education are effects are still less thanhalf the size of most of
capturing distinct phenomena. We therefore the corresponding estimates for women, and
present estimates by mothers' education they appeareven smaller when viewed in light
group in a sample restricted to women whose of the greaterdegree of labor-forceattachment
husbands have earnings in the middle third among husbands.
of the earnings distribution. Again, the
2SLS estimates suggest that the impact of Ill. Comparisonwith Estimates
childbearing on labor supply declines as ed- UsingMultipleBirths
ucation rises, contradicting a theoretical
prediction and the OLS estimates, both of The most important source of exogenous
which suggest that the labor supply of more variationin fertility used in fertility researchto
educated women responds more to the pres- date is twinning. Rosenzweig and Wolpin
ence of children. This finding is even more (1980b) used 87 U.S. twin pairs to estimate
remarkable when viewed in light of the fact labor-supply effects, and Rosenzweig and
that participation rates increase with moth- Wolpin (1980a) used 25 twin pairs from India
ers' schooling. It should be noted, however, to estimate the effect of family size on school
that while the results by education group progress.Bronarsand Grogger( 1994) were the
differ substantially, and the pattern of first to study the consequences of multiple
differences is consistent across outcomes, birthswith Census data. They used twins in the
the estimates for subgroups are not very 1970 and 1980 PUMS to estimate the effect of
precise. additional childbearing on mothers' labor-
The last panel in Table 9 (Panel D) reports market status, though most of their estimates
estimates for husbands, conditional on wives' are for unwed mothers. Gangadharan and
education. OLS estimates of labor-supply ef- Rosenbloom ( 1996) also used Census twins to
fects for husbands are small and negative, and estimatethe reduced-formeffect of twinningon
they decrease in magnitude as wives' school- labor-supplyvariables,but they fail to scale the
ing increases. As with the overall estimates for reduced-formeffects of twinning into effects of
husbands in Table 7, the 2SLS estimates for childbearing.These studies focused almost ex-
husbands in Table 9 are small and not signif- clusively on twinning at first birth. An excep-
icantly different from zero. tion is the Bronars and Grogger study, which
Table 10 reportsestimatesconditionalon hus- also briefly discusses (p. 1149) some estimates
bands' earnings and wives' schooling using using twins at second birth.
1990 data. These results are largely similar to A twin second birthis similarto the Same sex
those for 1980, showing 2SLS estimatesthatde- instrumentin that it can be used to measurethe
cline in magnitudewith husbands'searningsand consequencesof moving from two to threechil-
wives' schooling, while the OLS estimates for dren. We noted in the discussion of Table 4,
wives by schooling group are stable or increas- however, that the use of twins as an instrument
ing. One interestingdifference,however, is that may be problematicsince twinningprobabilities
the 1990 results show some small, but statisti- appear to be correlated with some observed
cally significant,positive effects of childbearing characteristicsof the mother.On the otherhand,
on the labor supply of the husbandsof less ed- if the demographic characteristics associated
ucated women. The estimated effect (standard with twinningareall observed,thenthese factors
error)on participationratesis 0.031 (0.013) for can be controlledin 2SLS estimation.
husbandsof women who are high-school grad- 2SLS estimates using Same sex and Twins-
uates and 0.053 (0.023) for husbandsof women 2 are compared in Table 11. As in Table 7,
who did not graduatehigh school. The effect on the models used to produce these e stimates
TABLE 10-2SLS ESTIMATES OF LABOR-SUPPLY MODELS WITH INTERACTION TERMS USING 1990 CENSUS DATA
More
than 2 Workedfor pay Weeks/year
children Mean of Mean of
First dependent dependent
Sample/variables stage variable OLS 2SLS variable OLS 2SLS
A. Results for wives by husband's earnings:
Bottom third of 0.064 0.668 -0.160 -0.129 26.3 -8.8 -5.99
husband's (0.003) (0.003) (0.045) (0.15) (2.18)
earnings
distribution
Wife > high-school 0.064 0.718 -0.147 -0.058 29.1 -8.43 -3.60
graduate (0.002) (0.003) (0.038) (0.13) (1.84)
C. Results for wives by wife's education for women whose husband's earnings are in middle third:
Wife < high-school 0.073 0.579 -0.128 -0.279 21.7 -6.92 -15.4
graduate (0.008) - (0.008) (0.097) (0.37) (4.85)
Wife high-school 0.082 0.707 -0.122 -0.204 28.8 -7.62 -9.20
graduate (0.004) (0.005) (0.052) (0.23) (2.58)
Wife > high-school 0.071 0.795 -0.130 -0.071 33.3 -8.40 -6.05
graduate (0.004) - (0.005) (0.060) (0.28) (2.98)
Wife > high school 0.064 0.982 -0.004 -0.014 48.7 -0.41 -1.53
graduate (0.002) (0.001) (0.014) (0.07) (0.99)
Notes: The table reportsestimates of the coefficient on More than 2 children in equation (4) in the text, modified to allow
interactionswith wives' schooling and husbands'educationas indicated.Main effects for each interactionvariable(husband's
earnings distributionand wife's education) are included in the equation. Other covariates in the models are those listed in
the notes to Table 8. Data arefrom the 1990 marriedwomen and husbandsamples.Standarderrorsarereportedin parentheses.
TABLE 11-COMPARISION OF 2SLS ESTIMATES USING SAME SEX AND TwINs-2 INSTRUMENTS
IN 1980 CENSUS DATA
Dependent variable:
Workedfor pay -0.125 -0.079 -0.123 -0.087 0.004 -0.001
(0.026) (0.013) (0.028) (0.017) (0.009) (0.005)
Notes: The table reports 2SLS estimates of the coefficient on More than 2 children in equation (4) in the text using Same
sex and Twins-2 as instruments.Other covariates in the models are Age, Age at first birth, ages of the first two children,
plus indicators for Boy Ist, Boy 2nd, Black, Hispanic, and Other race. Data are from the 1980 Census. Standarderrors
are reportedin parentheses.
include exogenous covariates to control for tween the second child's birth and the birth
mothers' age, race, age at first birth, and the of a non-twin third child. In the 1980 sample,
sex of the first two children. Additional cov- for example, the average age of third chil-
ariates included in these models are the ages dren who are twins is 6.4 years while the
of the first and second child in quarters.The average age of other third children is five
estimates of female labor-supply effects pro- years. Regression-adjusting for the covaria-
duced using Twins-2 are consistently smaller tes used to construct the estimates in Table
than the corresponding estimates using Same 10, the age gap between twins and other third
sex. Although the contrast between Same sex children grows to about 2.5 years. This dif-
and Twins-2 coefficient estimates is not large ference in ages has implications for labor-
enough to be statistically significant for many supply estimates constructed using Same sex
of the individual coefficients, the comparison and twins instruments if the effect of chil-
of estimates strongly suggests these two dren on labor supply is larger when the chil-
shocks have different effects. dren are younger.
A likely explanation for the smaller We use the following model to check
Twins-2 effects is that, conditional on the whether differences in the Same sex and
age of the second child, a third child who is Twins-2 2SLS estimates can be explained by
born as a consequence of twinning is nec- differences in the ages of third children. The
essarily older than a third child who is born equation of interest is
for other reasons. This is because third chil-
dren who are born as twins are exactly the (8) yi = a'wi + aisli + a2s2i + a3a1i
same age as second children, while at least
a year and usually longer must go by be- + a4a2i + pi Xi + Se,
TABLE 12-2SLS AND 3SLS ESTIMATES OF TWO-PARAMETER LABOR-SUPPLY MODELS USING 1980 CENSUS DATA
Notes: Panel A of the table reports 2SLS and 3SLS parameterestimates for equation (10) in the text. Same sex and Twins-
2 are both used as instruments.The restricted models in Panel A force the parametera* (the age at which labor-supply
effects decay to zero) to be the same for all four dependent variables in joint estimation using nonlinear 3SLS. Panels B
and C report 2SLS estimates of equation (11) using the Same sex and Twins-2 instruments separately. Other covariates
in the models are listed in the notes to Table 11. The data are from the 1980 Census all-women sample. Standarderrors
are reportedin parentheses.
where aIi and a2i are the ages of the first two on the two endogenous regressors in (10), xi
children. The coefficient fPi is now an indi- and a3i xi .
vidually varying causal effect that depends 2SLS estimates of 60 and j3Iare reportedin
on the age of the third child. In particular, Table 12 for the full 1980 sample, where a3i
we assume was measured to the nearest quarter for the
purposes of estimation. All of the estimates of
(9) pi = 00 + Pja3i ,60 are negative and all of the estimates of 61S
are positive, suggesting that the negative im-
where a3i is equal to the age of the mothers' pact of childbearing declines as the thirdchild
third child for women who have a third child ages. The table also reports estimates of the
and is equal to zero otherwise. Combining (8) value of a3i at which,3i = 0; this is a =--60
and (9) generates the estimating equation, /31. Estimates of a* are 12.4 years for effects
on Workedfor pay, 12.3 years for effects on
(10) yi = a'wi + alsli + a2s2i + a3a1i Weeks worked, 14.4 years for effects on
Hours/week, and 12.8 years for effects on La-
+ a4a2i + /3oxi +.,I/(a3ixi) + Si bor income.16 We also estimated a * under the
restrictionthat /1aa * -- Po with the same younger child. It is worth noting, however,
value of a * across all four dependent vari- that the model outlined in this section also
ables. The estimation method for this model is serves to explain why the twins estinmatesre-
three-stage least squares (3SLS). The re- ported by Bronars and Grogger (1994) for
stricted estimate is 13.4 with standarderrorof married mothers are smaller than the Same
4.4. Imposing this restrictionleads to slightly sex estimates reported here. When Bronars
smaller standarderrorsfor the estimates of 130 and Grogger use twins to estimate the effects
and 131.The test statistic for this restriction, of childbearing conditional on the age of the
distributedas x2(3) under the null hypothesis first child (and hence on the age of the twin),
that the restrictions are satisfied, takes on the they find effects on the labor-force partici-
value 0.79, which has a p-value of about 0.86. pation rates of mothers of children aged 0-
To further illustrate how this model recon- 3 remarkably similar to the Same sex esti-
ciles the Same sex and Twins-2estimates, note mates, with no effects for the mothers of
that if 13, - 13o/a*, we have children aged 10- 13 (see Table 4 in Bronars
and Grogger, 1994). Because second-born
(11) yi = a'wi + alsi + a2s2i + a3ali twins are younger, on average, than firstborn
twins, age differences could also explain
+ a4a2i + f3o(I - a3i /a*)xi + s.i- why the effects of twins at second birth
briefly mentioned by Bronars and Grogger
Substituting the pooled estimate of a* into in the text of their article (p. 1 149) are larger
( 11), we can use the Same sex and Twins-2 than their estimates of the effects of twins at
instrumentsto construct separateestimates of first birth.'8
f30in (11) by treating (1 - a3i/a*)xi as the
single endogenous regressor.The results when IV. Implicationsfor the Increasein
a * = 13.4, reportedin Panels B and C of Table Female Labor Supply
12, show that the Same sex and Twins-2 in-
strumentsgenerate very similarestimates of 130 At the turn of the century, less than 20 per-
for all dependent variables. This suggests that cent of all workers were women. Today,
the model of the effect of childbearing em- women make up almost half the workforce
bodied in (9), combined with the restriction (Goldin, 1990). A number of researchers
that f3idecays to zero at age 13.4, does a good have attempted to decompose the rise in the
job of reconciling the Same sex and Twins-2 female labor-force participation rates into
estimates. 7 components attributable to demand and sup-
Differences in the age of the third child ply shifts. For example, Mincer (1962) con-
constitute one of many possible explanations cluded that 90 percent of the rise in postwar
for the contrast between the Same sex and labor-force participation of married women
Twins-2 estimates. For example, there may can be attributed to an increase in demand.
be economies of scale in parenting two chil- James P. Smith and Ward (1984) also found
dren of the same age. On the other hand, that demand characteristics can explain a ma-
closely spaced young children may require jority of the increase in total hours worked by
more attention than an older child and a all women in between 1850 and 1980. In con-
trast, Goldin ( 1990) argues that shifts in sup-
ply explain about half of the change in female
labor supply become positive once the third child is older
than a*. This approximation seems harmless since only
about 2 percent of third children are older than 13 in our " The fact that the Bronars and Grogger estimates are
data (because the oldest mother is aged 35). less precise than the twins estimates reportedhere is likely
'7 If we set a * = - f3o/f3,using the coefficient estimates due to their having drawn a 1-percent sample of singleton
from each equation, then the Same sex and Twins-2 esti- births for the comparison sample. Note also that Bronars
mates of (11) for any equation will necessarily be iden- and Grogger's estimates are for the reduced-form impact
tical. The point of estimation with a* fixed at 13.4 is to of twinning; for purposes of comparison, these estimates
show how one extra free parameterreconciles all four of should be scaled up by dividing by the twins first-stage
the Same sex and Twins-2 estimates. effect (about 0.68 in their data).
labor-force participation between 1960 and be much smaller and possibly even absent
1980. among college-educated women and women
Declining fertility represents a potentially whose husbands have high wages. This result
importantsupply shifter thatmight account for contradicts the predictions of some theories
some of the increase in female labor-force at- of household time allocation as well as the
tachment. How much of the trend in labor- OLS results, which suggest that the labor-
force attachment in the population we have supply consequences of childbearing are
studied can be accounted for by reduced child- larger for more educated women. Our esti-
bearing beyond the second child? Table I mates consistently show that the labor-market
showed that the probability of having more consequences of childbearing are more likely
than two children for women aged 21-35 with to be severe for poor and less educated
at least two children fell by 16.5 percentage women.
points between 1970 and 1990, a drop of about Equally important is the finding that hus-
30 percent. At the same time, labor-force par- bands change their labor-market behavior
ticipation rates rose by 21.8 percentagepoints, very little in response to a change in family
a 49-percent increase. Similar statistics for size. Even the husbands of well-educated and
other groups reportedin Table I show that our relatively well-paid women do not change
sample is not unusual in experiencing these their work habits in response to the birth of a
trends. child. Thus, families absorb the cost of caring
Using the Same sex 2SLS estimate of the for a third child either through a reduction in
impact of More than 2 children on Workedfor wife's earnings or by purchasing child-care
pay from Table 7 ( - 0.119), declining fertility services from nonfamily providers. If addi-
can account for an employment increase equal tional childbearing does lead husbands to put
to 0.165 x 0.12, which is about 2 percentage additional time into home production of child
points. This calculation suggests that even care, this is done at the expense of the hus-
though childbearing clearly affects labor sup- band's leisure time and not through a reduc-
ply, the increase in female labor-force partic- tion in his work effort. We also find little
ipation has been so large thatdeclining fertility evidence of an increase in husbands' earnings
can explain only a small fractionof the overall that would offset the decline in wives' eam-
change. ings. In spite of the increase in women's
wages and labor-force participationrates dur-
V. Conclusions ing the period studied here, the labor-market
behavior of most married men appears to
Economic models of household behavior have remained largely insensitive to the num-
generate a rich variety of predictionsand theo- ber of children.
retical relationships, few of which have been
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