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Intertemporal Substitution in Maternal Labor Supply: Evidence using State School Entrance Age Laws

Listed author(s):
  • Barua, Rashmi

In this paper, I propose a new framework to study the intertemporal labor supply hypothesis. I use an exogenous source of variation in maternal net earning opportunities, generated through school entrance age of children, to study intertemporal labor supply behavior. Employing data from the 1980 US Census and the NLSY, I estimate the effect of a one year delay in school attendance on long run maternal labor supply. To deal with the endogeneity of school attendance age, I exploit the variation in child month of birth and state kindergarten entrance age laws. IV estimates imply that having a 5 year old enrolled in school increases labor supply measures for married women, with no younger children, by between 7 to 34 percent. In contrast to the results for married mothers, I do not find any statistically significant effect on labor market outcomes for single mothers or mothers of 5 year olds with additional younger children. Further, using a sample of 7 to 10 year olds from the NLSY, I investigate persistence in employment outcomes for a married mother whose child delayed school entry. The estimates suggest that delayed school enrollment has long run implications for maternal labor supply. Results point towards significant intertemporal substitution in labor supply. Rough calculations yield an uncompensated wage elasticity of 0.76 and an intertemporal elasticity of substitution equal to 1.1.

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File URL: https://mpra.ub.uni-muenchen.de/7923/1/MPRA_paper_7923.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 7923.

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Date of creation: 12 May 2008
Handle: RePEc:pra:mprapa:7923
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  1. Richard Blundell & Alan Duncan & Costas Meghir, 1998. "Estimating Labor Supply Responses Using Tax Reforms," Econometrica, Econometric Society, vol. 66(4), pages 827-862, July.
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  8. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier.
  9. Rashmi Barua & Kevin Lang, 2009. "School Entry, Educational Attainment and Quarter of Birth: A Cautionary Tale of LATE," NBER Working Papers 15236, National Bureau of Economic Research, Inc.
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  12. Samuel Berlinski & Sebastian Galiani & Patrick J. McEwan, 2011. "Preschool and Maternal Labor Market Outcomes: Evidence from a Regression Discontinuity Design," Economic Development and Cultural Change, University of Chicago Press, vol. 59(2), pages 313-344.
  13. MaCurdy, Thomas E, 1981. "An Empirical Model of Labor Supply in a Life-Cycle Setting," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1059-1085, December.
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  18. repec:fth:prinin:389 is not listed on IDEAS
  19. Victor Fuchs & Alan B. Krueger & James Poterba, 1997. "Why Do Economists Disagree About Policy? The Roles of Beliefs About Parameters and Values," Working Papers 768, Princeton University, Department of Economics, Industrial Relations Section..
  20. Lefebvre, Pierre & Merrigan, Philip & Verstraete, Matthieu, 2009. "Dynamic labour supply effects of childcare subsidies: Evidence from a Canadian natural experiment on low-fee universal child care," Labour Economics, Elsevier, vol. 16(5), pages 490-502, October.
  21. Mroz, Thomas A, 1987. "The Sensitivity of an Empirical Model of Married Women's Hours of Work to Economic and Statistical Assumptions," Econometrica, Econometric Society, vol. 55(4), pages 765-799, July.
  22. Todd E. Elder & Darren H. Lubotsky, 2009. "Kindergarten Entrance Age and Children’s Achievement: Impacts of State Policies, Family Background, and Peers," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).
  23. Altonji, Joseph G, 1986. "Intertemporal Substitution in Labor Supply: Evidence from Micro Data," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 176-215, June.
  24. Francine D. Blau & Lawrence M. Kahn, 2007. "Changes in the Labor Supply Behavior of Married Women: 1980–2000," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 393-438.
  25. Casey B. Mulligan, 1999. "Substition over Time: Another Look at Life-Cycle Labor Supply," NBER Chapters,in: NBER Macroeconomics Annual 1998, volume 13, pages 75-152 National Bureau of Economic Research, Inc.
  26. Elizabeth U. Cascio, 2009. "Maternal Labor Supply and the Introduction of Kindergartens into American Public Schools," Journal of Human Resources, University of Wisconsin Press, vol. 44(1).
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