October 19, 2006
Julian P. Cristia
Estimating the causal effect of a first child on female labor supply is complicated by the endogeneity of the fertility decision. That is, factors that trigger the decision to have a first child could also affect baseline labor supply; empirical approaches that do not account for this difficulty will yield biased estimates. This paper addresses this problem by focusing on a sample of women from the National Survey of Family Growth (NSFG) who sought help to get pregnant. After a certain period, only some of these women gave birth to a child. In this instance, fertility appears to be exogenous to labor supply in that women’s employment during months prior to seeking help becoming pregnant is uncorrelated with subsequent fertility. Results using this strategy show that having a first child younger than one year old reduces female employment by 26.3 percentage points. Unlike previous studies, which found smaller effects when dealing with the endogeneity problem of fertility, estimates in this paper are close to ordinary least squares (OLS) estimates obtained using census data and to OLS and fixed-effects estimates from NSFG data.