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Essays on work and fertility

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  • Kellokumpu, Jenni

Abstract

This dissertation consists of four empirical essays all related to children and parents' labor supply, earnings and income in Finland. In the essays the problem of unobserved heterogeneity has been attacked in various ways. In the first essay, identical adult twins are used to estimate the impact of children on lifetime earnings and income. Identical twins share not only the same family but the same genes, hence such unobserved factors as family background and innate ability can be controlled for in the estimation. This is the closest possible similarity between two persons. The results suggest that both mothers and fathers have around 30 to 40% higher lifetime earnings compared to childless women and men even after controlling for family background and innate ability. The positive and large effect on mothers' earnings is a surprising result and against previous empirical evidence – though the focus of earlier research has typically been on the immediate years following childbirth. Although there are several potential explanations for such a large effect, the size of the found effect is surprisingly great. The second essay studies the effect of income on fertility by using job loss due to a plant closure as a source of exogenous variation in household income. Unlike previous studies, this essay focuses on couples and the impact of joint family income on fertility. The results show that the woman's job loss has a negative effect on fertility, while the man's has no impact on fertility. This suggests that the income effect is not the main mechanism through which job loss influences couples' fertility behavior. Career concerns, especially in the case of highly educated women, seem to be a much more important determinant. The result is similar to the one found in a previous study of the effects of female job loss. The third essay exploits the exogenous variation in family size, caused by the families' preference to have both boys and girls, to study the impact of children on parents' labor supply and income. The results suggest that another child has a sizeable negative impact on the maternal employment of cohabiting and married mothers, while there is no effect on the labor supply of single mothers. The labor supply response of Finnish mothers is much larger than found in the previous empirical studies in the US, the UK and Sweden using the same identification strategy. However, the relatively large maternal labor supply effects are in line with the earlier Finnish research. I find that another child has no impact on labor supply of fathers. In the fourth essay, the wages after maternity and paternity leaves are studied. However, in this essay the chosen method is less suitable in tackling the unobserved heterogeneity: being unmarried in the 1995 is a poor predictor of being childless: If one is not married in the 1995 no longer necessarily means one is without children in the years 2001 and 2002. In this essay, a maternity leave is associated with a reduction in wage after returning to employment. However, this association seems to be only short-lived. A paternity leave has no or only a small positive effect on wages.

Suggested Citation

  • Kellokumpu, Jenni, 2015. "Essays on work and fertility," Research Reports P69, VATT Institute for Economic Research.
    • Handle: RePEc:fer:resrep:p69
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