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Increasing the credibility of the Twin birth instrument

Author

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  • Farbmacher, Helmut

    (Munich Center for the Economics of Aging, Max Planck Society)

  • Guber, Raphael

    (Munich Center for the Economics of Aging, Max Planck Society)

  • Vikström, Johan

    (IFAU - Institute for Evaluation of Labour Market and Education Policy)

Abstract

Twin births are an important instrumental variable for the endogenous fertility decision. However, in many economic settings, twins are not exogenous as dizygotic twinning is known to be correlated with maternal characteristics and fertility treatments. Following the medical literature, we assume that monozygotic twins are exogenous, and construct a new instrument, which corrects for the selection bias although monozygotic twinning is usually unobserved. We use longitudinal administrative data from Sweden and US census data and show that the usual twin instrument is not only related to observed but also to unobserved determinants of economic outcomes, while our new instrument is not. We demonstrate the relevance of our new instrument in two labor market applications and find that the classical twin instrument underestimates the true negative effect of fertility on labor force participation and earnings.

Suggested Citation

  • Farbmacher, Helmut & Guber, Raphael & Vikström, Johan, 2016. "Increasing the credibility of the Twin birth instrument," Working Paper Series 2016:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    • Handle: RePEc:hhs:ifauwp:2016_010
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    References listed on IDEAS

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    1. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2010. "Small Family, Smart Family? Family Size and the IQ Scores of Young Men," Journal of Human Resources, University of Wisconsin Press, vol. 45(1).
    2. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2005. "The More the Merrier? The Effect of Family Size and Birth Order on Children's Education," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(2), pages 669-700.
    3. Åslund, Olof & Grönqvist, Hans, 2010. "Family size and child outcomes: Is there really no trade-off?," Labour Economics, Elsevier, vol. 17(1), pages 130-139, January.
    4. Joshua Angrist & Victor Lavy & Analia Schlosser, 2010. "Multiple Experiments for the Causal Link between the Quantity and Quality of Children," Journal of Labor Economics, University of Chicago Press, vol. 28(4), pages 773-824, October.
    5. Bronars, Stephen G & Grogger, Jeff, 1994. "The Economic Consequences of Unwed Motherhood: Using Twin Births as a Natural Experiment," American Economic Review, American Economic Association, vol. 84(5), pages 1141-1156, December.
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    Cited by:

    1. Tabea Bucher-Koenen & Helmut Farbmacher & Raphael Guber & Johan Vikström, 2020. "Double Trouble: The Burden of Child-rearing and Working on Maternal Mortality," Demography, Springer;Population Association of America (PAA), vol. 57(2), pages 559-576, April.
    2. Joseph Boniface Ajefu, 2019. "Does having children affect women’s entrepreneurship decision? Evidence from Nigeria," Review of Economics of the Household, Springer, vol. 17(3), pages 843-860, September.
    3. Boyan Zheng & Qiongshi Lu & Jason Fletcher, 2023. "Estimating Causal Effects of Fertility on Life Course Outcomes: Evidence Using A Dyadic Genetic Instrumental Variable Approach," NBER Working Papers 30955, National Bureau of Economic Research, Inc.
    4. Manuel Denzer, 2019. "Estimating Causal Effects in Binary Response Models with Binary Endogenous Explanatory Variables - A Comparison of Possible Estimators," Working Papers 1916, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz.
    5. Mark E. McGovern, 2019. "How much does birth weight matter for child health in developing countries? Estimates from siblings and twins," Health Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 3-22, January.
    6. Beatrice Baaba Tawiah, 2023. "The Effect of Children on Health," Working Papers Dissertations 103, Paderborn University, Faculty of Business Administration and Economics.
    7. Semih Tumen & Belgi Turan, 2023. "The effect of fertility on female labor supply in a labor market with extensive informality," Empirical Economics, Springer, vol. 65(4), pages 1855-1894, October.
    8. Erika Raquel Badillo & Lina Cardona-Sosa & Carlos Medina & Leonardo Fabio Morales & Christian Posso, 2019. "Twin instrument, fertility and women’s labor force participation: evidence from Colombian low-income families," Borradores de Economia 1071, Banco de la Republica de Colombia.
    9. Cepaluni, Gabriel & Chewning, Taylor Kinsley & Driscoll, Amanda & Faganello, Marco Antonio, 2022. "Conditional cash transfers and child labor," World Development, Elsevier, vol. 152(C).

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    More about this item

    Keywords

    Twin birth instrument;

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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