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Twin instrument, fertility and women’s labor force participation: evidence from Colombian low-income families

Author

Listed:
  • Erika Raquel Badillo

    () (Universidad Autónoma Latinoamericana)

  • Lina Cardona-Sosa

    () (Banco de la República de Colombia)

  • Carlos Medina

    () (Banco de la República de Colombia)

  • Leonardo Fabio Morales

    () (Banco de la República de Colombia)

  • Christian Posso

    () (Banco de la República de Colombia)

Abstract

This paper uses the twin births instrument to estimate the causal effect of fertility on labor market outcomes for first-time mothers in Colombia. The nature of the data used allows us to overcome previous concerns regarding the validity of this instrument. We can control for observed pre-pregnancy characteristics, and by including fixed effects, we can control for time-invariant unobserved heterogeneity. Results coming from the traditional instrumental variables approach suggest a reduction in female labor supply close to 5.2 percentage points (18%) due to a marginal increase in fertility. Additionally, after following Farbmacher, Guber and Vikström (2018) to eliminate the bias of twins resulting from mothers’ characteristics and in vitro fertilizations (e.g., a non-exogenous event), the obtained results are of the same magnitude but less significant than those of the traditional instrument. By making additional assumptions on the correlation of the twin instrument and the error of the structural equation following Nevo and Rosen (2012), we find an upper bound estimate for the reduction in female labor supply close to -5 ppt. **** RESUMEN: En este estudio usamos nacimientos múltiples como instrumento para estimar el efecto causal de la fecundidad en diferentes resultados de mercado laboral para madres primerizas en Colombia. La naturaleza de los datos nos permite superar problemas, sobre la validez de este instrumento, que han sido ampliamente documentados en la literatura. Esto principalmente porque podemos controlar por características observadas de la madre antes del parto, más aún, al incluir efectos fijos por madre podemos controlar por cualquier característica no observada que sea invariante en el tiempo. Nuestras estimaciones de regresiones tradicionales tipo variables instrumentales, sugieren una reducción de 5,2 puntos porcentuales (18%) como resultado de un incremento marginal en la fecundidad. Adicionalmente, después de seguir la metodología de Farbmacher, Guber and Vikström (2018) con el fin de eliminar el sesgo que resulta de diferencias inobservadas de las madres antes del parto y de posibles fertilizaciones in-vitro, las cuales no son un fenómeno exógeno, los resultados obtenidos se mantienen en magnitud. Finalmente, asumiendo la dirección de la correlación entre el instrumento y el error de la ecuación estructural, usando una metodología tipo Nevo and Rosen (2012), encontramos una cota superior del efecto de la fecundidad en la participación laboral femenina de -5 puntos porcentuales.

Suggested Citation

  • 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.
  • Handle: RePEc:bdr:borrec:1071
    as

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    References listed on IDEAS

    as
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    Keywords

    Usando nacimientos múltiples para identificar el efecto de la fecundidad en la oferta laboral de mujeres de bajos ingresos en Colombia; Fecundidad; oferta laboral femenina; nacimientos múltiples; variables instrumentales.;

    JEL classification:

    • 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
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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