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Child Costs and the Causal Effect of Fertility on Female Labor Supply: An investigation for Indonesia 1993-2008

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  • Priebe, Jan

Abstract

Over the last two decades Indonesia has experienced a significant decline in fertility rates and substantial increases in the level of education of women. Despite this development female labor force participation rates have remained roughly constant throughout this period. This paper explores the causes for the seeming unresponsiveness of female labor supply to changes in fertility. The empirical analysis is performed using annual data from the national household survey Susenas for the period 1993-2008. The final sample comprises about 850,000 woman aged 21 to 35 with at least two children. Identification of causal effects builds upon the empirical strategy as outlined in Angrist and Evans (1998). The results suggest that a considerable share of women in Indonesia works in the labor market in order to finance basic expenditures on their children. Therefore, reductions in fertility rates seem to have led to two opposing effects that contributed to aggregate levels of female labor supply being constant. While some women were more likely to participate in the labor market due to a lower number of children, others might now lack the need to engage in the labor market due to a relaxation in their budget constraint.

Suggested Citation

  • Priebe, Jan, 2011. "Child Costs and the Causal Effect of Fertility on Female Labor Supply: An investigation for Indonesia 1993-2008," Proceedings of the German Development Economics Conference, Berlin 2011 67, Verein für Socialpolitik, Research Committee Development Economics.
  • Handle: RePEc:zbw:gdec11:67
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    References listed on IDEAS

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    Cited by:

    1. Pieters, Janneke & Klasen, Stephan, 2011. "Drivers of female labour force participation in urban India during India's Economic Boom," Proceedings of the German Development Economics Conference, Berlin 2011 65, Verein für Socialpolitik, Research Committee Development Economics.
    2. Klasen, Stephan & Pieters, Janneke, 2012. "Push or Pull? Drivers of Female Labor Force Participation during India's Economic Boom," IZA Discussion Papers 6395, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Causality; Child Costs; Indonesia; Labor Supply; LATE;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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