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The Effect of Children on Earnings Using Exogenous Variation in Family Size: Swedish Evidence

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  • Hirvonen, Lalaina

    ()
    (Swedish Institute for Social Research, Stockholm University)

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    Abstract

    This paper takes advantage of an exogeneous variation in the sex composition of previous children, to study the effect of an additional child on women’s earnings. I use OLS and IV as well as quantile regression to analyze the impact of an increase in family size on labour force participation and level of earnings from 1980-2005 Swedish register data. The IV technique produces estimates that are not systematically different from those from OLS, at the expense of a low precision. Including men in the analysis shows that fathers’ labour force outcomes are less likely to be affected by an increase in family size compared to mothers. My findings indicate that having an additional child has a stronger negative impact on earnings than on labour force participation. However, there is evidence of catching-up effect over time, as women tend to recover gradually from the negative earnings effect. Using different time perspective, the results remain stable with respect to the rapid expansion of the Swedish family policies. The quantile regression approach suggests that other mechanisms than childbearing lie behind the large wage gap at the top of the wage distribution, often referred to, in Sweden, as the glass ceiling pattern.

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    Bibliographic Info

    Paper provided by Swedish Institute for Social Research in its series Working Paper Series with number 2/2009.

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    Length: 46 pages
    Date of creation: 05 Mar 2009
    Date of revision:
    Handle: RePEc:hhs:sofiwp:2009_002

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    References

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    1. Albrecht, James & Björklund, Anders & Vroman, Susan, 2001. "Is There a Glass Ceiling in Sweden?," IZA Discussion Papers 282, Institute for the Study of Labor (IZA).
    2. Jacob Mincer & Solomon Polacheck, 1974. "Family Investments in Human Capital: Earnings of Women," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 397-431 National Bureau of Economic Research, Inc.
    3. Alberto Abadie & Joshua Angrist & Guido Imbens, 2002. "Instrumental Variables Estimates of the Effect of Subsidized Training on the Quantiles of Trainee Earnings," Econometrica, Econometric Society, Econometric Society, vol. 70(1), pages 91-117, January.
    4. Mincer, Jacob & Polachek, Solomon, 1974. "Family Investment in Human Capital: Earnings of Women," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 82(2), pages S76-S108, Part II, .
    5. James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
    6. Maurin, Eric & Moschion, Julie, 2006. "The Social Multiplier and Labour Market Participation of Mothers," IZA Discussion Papers 2513, Institute for the Study of Labor (IZA).
    7. Pierre‐Carl Michaud & Konstantinos Tatsiramos, 2011. "Fertility and female employment dynamics in Europe: the effect of using alternative econometric modeling assumptions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(4), pages 641-668, 06.
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    9. Albrecht, J & Edin, P-A & Sundstrom, M & Vroman, S-B, 1996. "Career Interruptions and Subsequent Earning : A Reexamination Using Swedish Data," Papers, Uppsala - Working Paper Series 1996-23, Uppsala - Working Paper Series.
    10. Rodolfo Bulatao, 1981. "Values and disvalues of children in successive childbearing decisions," Demography, Springer, Springer, vol. 18(1), pages 1-25, February.
    11. Jacob Mincer & Haim Ofek, 1982. "Interrupted Work Careers: Depreciation and Restoration of Human Capital," Journal of Human Resources, University of Wisconsin Press, vol. 17(1), pages 3-24.
    12. Christopher F Baum & Mark E Schaffer & Steven Stillman, 2002. "IVREG2: Stata module for extended instrumental variables/2SLS and GMM estimation," Statistical Software Components S425401, Boston College Department of Economics, revised 28 Jul 2014.
    13. Hyunbae Chun & Jeungil Oh, 2002. "An instrumental variable estimate of the effect of fertility on the labour force participation of married women," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 9(10), pages 631-634.
    14. Ben-Porath, Yoram & Welch, Finis, 1976. "Do Sex Preferences Really Matter?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 90(2), pages 285-307, May.
    15. Daouli, Joan & Demoussis, Michael & Giannakopoulos, Nicholas, 2009. "Sibling-sex composition and its effects on fertility and labor supply of Greek mothers," Economics Letters, Elsevier, Elsevier, vol. 102(3), pages 189-191, March.
    16. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers 0151, National Bureau of Economic Research, Inc.
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    Cited by:
    1. Åslund, Olof & Grönqvist, Hans, 2010. "Family size and child outcomes: Is there really no trade-off?," Labour Economics, Elsevier, Elsevier, vol. 17(1), pages 130-139, January.

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