The effect of fertility on economic wellbeing in rural Vietnam. A multilevel propensity score matching approach

This paper examines the role of the community context in the estimation of the effect of fertility on households’ economic wellbeing in rural Vietnam. Contextual characteristics can strongly influence both fertility and economic wellbeing and therefore it is crucially important to account for them in order to draw valid causal inference. The multilevel dimension introduces statistical complications and stimulates interesting research questions. We implement multilevel propensity score matching (PSM) techniques and propose a weaker version of the traditional SUTVA assumption. This assumption is usually overlooked in causal inference studies in demographic research, but it may be violated in the presence of spillover effects (interference). We propose a version of SUTVA that allows the effect of fertility on economic wellbeing to also depend on the overall fertility level in the community. We find a negative and substantively important effect of fertility on economic wellbeing and that the effect is stronger in high-level fertility communities, denoting the presence of spillover effects. On the contrary, fertility measured at the community level does not have a significant effect per se on households’ economic wellbeing.