Master of Arts / Department of Economics / James F. Ragan Jr / This report reviews the effects of fertility on female labor supply, primarily female labor force participation and work hours. Although estimates of the causal relationship between fertility and female labor supply are mixed, this report tries to review why and by how much an additional child in a family affects work decisions and work hours of mothers on average. Statistical analysis shows a decreasing trend in fertility and an increasing trend in female labor force participation throughout the world over the last four decades. Using different specifications and estimation techniques, empirical studies suggest that fertility has negative effects on maternal labor supply because childbearing falls on women and women have lower wage rates than men on average. The negative relationship between fertility and female labor supply is explained by social, economic, and technical forces that affect fertility and female labor supply, including an increase in the value of women’s time due to an increase in education levels of women, expensive childcare, and substitutes for children; emphasis on quality instead of quantity of children; an increase in employment opportunities for women; changes in social norms towards supporting women working outside their home; and technical progress in birth control.

Over the past 50 years, women have become important participants in the labor market. With the increase in the number of middle-aged women going through the menopause transition, the question arises as to the effect of this transition on the labor market. Previous studies have shown that reproductive cycles have a non-trivial negative effect on women’s labor market outcomes. Thus, the cessation of these reproductive cycles (menopause) should bring relief for these women. However, another body of literature asserts that the menopause transition itself has a negative effect on women’s mental and physical health and so may have a negative effect on labor market outcomes. This study seeks to explore the effect of the menopause transition on labor market outcomes. The empirical analyses are done using data from the National Longitudinal Survey of Young Women, with the key explanatory variables being the menopause transition stages: premenopause, perimenopause, surgical menopause and natural postmenopause. The regressions include a control for whether the woman experienced early menopause and whether she had a hysterectomy. The first part of the study examines the impact of the menopause transition on health using depression and the scores on the activities of daily living as the measures of health status. These analyses use cross sectional data drawn from the 1995 wave of the survey for activity limitations and the 2003 wave for the depression measure. The findings of these analyses indicate that the menopause transition increases the likelihood of depression and functional limitations. The main part of the study explores the effect of the menopause transition on the following labor market outcomes: labor force participation, hours worked, full time employment, wages, and self-employment. Ordinary Least Squares, the fixed effects model, the random effects model, and the family fixed effects (siblings) model are used to examine these questions. The analysis also uses 2SLS to correct for endogeneity of the menopause variables and the Heckman two-step procedure to correct for sample selection bias. The findings show that women in premenopause are less likely to be in the labor force than women in natural postmenopause, even after controlling for life-cycle variables. The results also indicate that there are certain benefits from using hormone replacement therapy (HRT), as women who had surgical menopause and are using hormones are more likely to be in the labor force than women with surgical menopause who are not using HRT. Women in premenopause and women in perimenopause are less likely to work full-time compared to women who experienced natural postmenopause. The findings also show that there are no significant differences in hours worked by women in the different menopause stages. Women in premenopause typically earn more than women in natural postmenopause. Furthermore, women in perimenopause and women with surgical menopause are more likely to be self employed. The findings indicate that, among a generally healthy population, the menopause transition results in an increase in labor supply. However, a wage penalty is observed among women in postmenopause, when compared to women who are premenopause. The implications of the findings are that menopause should not be medicalized but should be viewed in a social and cultural context as the changes that occur during the transition may open up possibilities for positive individual development. Thus the cessation of menstrual cycles brings relief for women and results in an increase in labor supply, albeit one associated with a wage penalty.

In diesem Beitrag wird eine Regressionsanalyse vorgestellt, die die Einflüsse auf die Entscheidung verheirateter deutscher Frauen untersucht, eine Erwerbstätigkeit aufzunehmen. Um Differenzen im Verhalten von ost- und westdeutschen Frauen zu ermitteln, erfolgte die Untersuchung getrennt in zwei Datensätzen. Zur Vermeidung von Annahmen über die Art des Zusammenhanges wurde das Generalisierte Additive Modell (GAM) gewählt, ein semiparametrisches Regressionsmodell. Diese Modellform, die nichtparametrische und parametrische Regressionsmethoden in sich vereint, hat bisher wenig Verbreitung in der Praxis gefunden. Dies lag vor allem am Schätz verfahren, dem Backfitting. Seit etwa einem Jahr gibt es neue Ansätze, in dieser Modellform zu schätzen. Die analytischen Eigenschaften des neuen Schätzers lassen sich leichter bestimmen. Mit dieser Schätzung konnten Unterschiede zwischen Ost und West genau herausgearbeitet werden und die funktionalen Zusammenhänge zwischen Einflußvariablen und Antwortvariable untersucht werden. Die Analyse brachte deutliche Unterschiede im Erwerbsverhalten zwischen der Frauen beider Landesteile zum Vorschein. / This paper will focus on the regression analysis of labor supply decisions of married German women. In order to determine differences East and West German women were compared seperately. To avoid assumptions about the functional type of correlation the Generalized Additive Model, a semiparametric regression model, was chosen. So far, this pattern consisting of nonparametric and parametric methods has not found acceptance in practical application. Reason for that is the backfitting-estimator. One year ago new ideas for the estimation by GAM were found. The analytical features of the new estimator are easier to determine. Using this method differences between East and West were discovered in detail and functional correlations between endogenous and exogenous variables were investigated. This analysis unveiled significant differences of labor supply behavior among East and West Germany.

The effect of fertility on female labor supply decisions in Turkey is analyzed in this thesis. Taking the endogeneity between fertility and labor supply into account, the causal effect of fertility is interpreted in an instrumental variables estimation framework. Results of the analysis indicate that fertility estimates of sex preference and twin based instruments on short term labor supply of women differ substantially. While fertility increases due to sex preference instrument cause no significant change in labor supply decisions, unexpected fertility shocks by twin instrument have an adverse effect on female labor supply.

China's rapid economic growth and social transitions have drawn substantial recent attention. However, there is still limited understanding of these phenomena and the mechanisms behind them. This dissertation investigates three aspects of China's development: education, female labor supply and responses to natural shocks. Chapter 1 sheds light on the option value of education by studying the impact of China's college enrollment expansion on educational attainment at the high school level. Standard human capital models without uncertainty rarely address the importance of the option value of education -- the opportunity that a certain level of education provides to obtain a higher level of education. Therefore, changes in option values can affect human capital investment decisions. Combining survey data with provincial statistics and applying a difference-in-differences method, I find that China's college expansion significantly increased the probabilities of enrolling in and completing high school. The probability of completing high school increased more than that of enrolling in high school. Female students benefited more, as did children whose mother had a high school degree. Chapter 2 studies the relationship between fertility and female labor supply. Many empirical studies find a negative correlation between the two, however the evidence on causal effects is weaker because fertility is endogenous. This paper studies the effects of childbearing on women's labor supply and earnings using a plausibly exogenous change, the relaxation of China's One Child Policy, as an instrument for family size. The main findings are that total fertility has no significant impact on time of working as a wage earner, but children under six have a negative effect. Neither total fertility nor children under six affect women's farming time or annual income. Chapter 3 explores the long-term consequences of China's Great Famine from 1959 to 1961. Several studies have investigated the causes of the famine, yet little empirical work examined its consequences. This paper examines a set of health and socioeconomic outcomes that have not been studied. I find a significant positive selection in the height of survivors born during the famine. Individuals born during the famine received less education than those born before or after the famine, were more likely to work in agriculture when starting to work and transferred less money to their parents.

abstract: This dissertation consists of two parts. The first part is about understanding the mechanism behind female labor supply movement over economic development. Female labor force participation follows a U-shape pattern over per capita GDP cross nationally as well as within some countries. This paper questions if this pattern can be explained through sectoral, uneven technological movements both at market and at home. For that I develop a general equilibrium model with married couples and home production. I defined multiple sectors both at home and in the market. And by feeding the model with uneven technological growth, I observe how participation rate moves over development. My results indicate that a decrease in labor supply is mainly due to structural transformation. Meaning, a higher technology in a large sector causes prices to go up in that sector relative to other. Hence, labor allocated to this sector will decrease. Assuming this sector has a big market share, it will decrease the labor supply. Also, I found that the increase in female labor supply is mostly because of movement from home to market as a result of a higher technological growth in the market. The second part is about developing a methodology to verify and compute the existence of recursive equilibrium in dynamic economies with capital accumulation and elastic labor supply. The method I develop stems from the multi-step monotone mapping methodology which is based on monotone operators and solving a fixed point problem at each step. The methodology is not only useful for verifying and computing the recursive competitive equilibrium, but also useful for obtaining intra- and inter-temporal comparative dynamics. I provide robust intra-temporal comparative statics about how consumption and leisure decisions change in response to changes in capital stock and inverse marginal utility of consumption. I also provide inter-temporal equilibrium comparative dynamics about how recursive equilibrium consumption and investment respond to changes in discount factor and production externality. Different from intra-temporal comparative statics, these are not robust as they only apply to a subclass of equilibrium where investment level is monotone. / Dissertation/Thesis / Doctoral Dissertation Economics 2018

This dissertation contains three chapters in the field of family and development economics. The first two chapters study the effects of traditional gender roles on economic outcomes. The last chapter discusses the effects of a spatial development policy in India. Chapter 1 examines the dynamics of intra-household time allocation in response to economic incentives, and the role of traditional gender norms. Using unique longitudinal data on Japanese households, it finds that spouses in dual-income households adjust their market hours but not home hours as own wages change. In addition, per earthquake-induced changes in market hours, wives make little or no change in home hours while husbands show significant, yet small in magnitude, responses. The responses are driven by individuals with less traditional gender role attitudes. Traditional gender roles exacerbate not only the asymmetry but also the rigidity of gendered division of intrafamily labor. Chapter 2 studies whether the effects of traditional gender roles on female labor supply are greater in endogamous marriage by examining the labor supply pattern of immigrant women in the United States. The endogenous formation of marriage is addressed by incorporating local marriage market conditions. Using survey responses on gender roles in source countries as cultural proxies, it finds that the negative effects of traditional gender roles on female labor supply are amplified in endogamous marriage at the extensive and intensive margins of labor market. Differential patterns of immigrant assimilation by marriage type fail to fully explain the asymmetry, supporting the hypothesis that culture is more relevant within endogamous marriage. Chapter 3 (with Shree Ravi) analyzes the aggregate and distributional effects of Special Economic Zones (SEZs) in India. It investigates the influence of Indian SEZs by exploiting spatial variations in the timing of zonal operations. Using satellite and survey data, it establishes that SEZs boosted economic activity within areas several times the size of the zones. The zones also drove a structural change in the local economy with resources shifting away from the informal sector and the formal sector growing in size and productivity. This growth, however, differently benefits workers across income and skill distributions.

The state of Virginia has been a leader in the design and implementation of welfare reform measures. State welfare reforms were enacted in 1996 and federal reforms followed shortly after in 1996. Initial decreases in program caseloads and the movement of former recipients from unemployment to employment have led initial reform measures to be widely heralded as successes. Significant concerns remain, however, about the ability of non-metropolitan labor markets to absorb female household heads currently on welfare. This thesis addresses potential differences in the impact of welfare reform measures in non-metropolitan and metropolitan labor markets by estimating wage and reservation wage equations for female household heads in Northern and Southwest Virginia. The results suggest young children and lack of access to automobiles create significantly greater barriers to employment in non-metropolitan than metropolitan labor markets. Estimated potential earnings in Southwest Virginia were lower than in Northern Virginia and suggest that female household heads will have trouble escaping poverty through employment. In fact, initial reported earnings for both areas have fallen below estimates of living wages needed to escape poverty. The results also suggest traditional labor market characteristics do not explain all of the differences in earnings, particularly the differences in the observed wages of persons exiting welfare as compared to the general population. If this is the case, policies that only address child care and transportation costs may have little impact as to the ability of welfare recipients to get and keep jobs that enable them to become economically self-sufficient. / Master of Science

Doctor of Philosophy / Department of Economics / Dong Li / This dissertation is a combination of three essays on spatial econometrics and labor economics. Essays 1 and 2 developed double length regression (DLR) tests for testing functional form and spatial dependence, which includes spatial error dependence and spatial lag dependence. More specifically, these essays derive the DLR joint, DLR one-direction, and DLR conditional tests for testing functional forms and spatial dependence. The essays also provide empirical examples and Monte Carlo simulations to examine how the DLR tests perform in the empirical work and how the power of the DLR test depends on changes in functional form and spatial dependence. The results suggested that DLR tests work similarly to its Lagrangian Multiplier (LM) counterpart for testing functional form and spatial dependence in the empirical example and simulations. The DLR tests do not require the second-order derivatives of the log-likelihood function, so they provide practitioners an easy-to-use method to test for functional forms and spatial dependence. Essay 3 investigates the effects of fertility on parental labor force participation and labor supply in Vietnam. The essay uses instrumental variable (IV) probit models to estimate the effects of fertility on parental labor force participation and the IV models to estimate the effects of fertility on parental labor supply. Using the gender of the first child and the same gender of the first two children as two instrumental variables, this essay found negative effects of fertility on maternal labor force participation and labor supply. It also found positive effects of fertility on paternal labor force participation and labor supply. The results suggest that fertility had the specialization effect on parental labor force participation and labor supply in Vietnam. The homogeneity test results indicate that the magnitude of the effects of fertility on parental labor force participation and labor supply is different among parents and locations.

One of the very interesting demographic features in the US over the last three decades of the 20th century is the increase of the married women labor force participation rate. Over the same period, estimated labor supply elasticity varies substantially. This dissertation is to investigate the reasons behind them. I first study the determinants of the increase of the labor participation rate for married women with preschool-aged children over the last three decades of the 20th century. Using 5% samples of the Integrated Public Use Microdata Series (IPUMS) for 1980, 1990 and 2000, I find that the existing explanations proposed in the literature may only account for 9.6% increase in the 1980s and 70% decrease in the 1990s. In this paper, I find that the rising ratio of career type women can explain 30.33% of the growth in the labor force participation rate, and the change in the composition of career motivating career type women can at least explain 17.22% growth across cohorts. Women who have been working three years before their first childbearing are more likely to return to work after the childbearing period. The analyzing data is the National Longitudinal Survey of Young Women (NLSYW) from 1968 to 2003 and the National Longitudinal Survey of Youth 1979 (NLSY79) from 1979 to 2008. This dissertation sheds some insight about a puzzle on estimated married women's labor supply elasticity variation. This important puzzle (sometimes referred to as the Hausman puzzle) is that the estimated labor supply elasticity varies substantially even when similar frameworks and similar datasets are used. I study the role of budget sets in producing this wide range of estimates. In particular, I study the effect of the typical convexification approximation of the non-convex budgets, and the well-known Heckman critique of the lack of bunching at the kink points of budget sets in the Hausman model. I introduce measurement error in nonlabor income to create an uncertain budget constraint that no longer implies bunching at kink points. Using the Panel Study of Income Dynamics (PSID) of 1984 and 2001, I find that neither the convexification approximation nor using a model with random budget sets affects the estimates. These results demonstrate that variations in budget constraints alone do not explain the different estimates of labor supply elasticity. Changing the level of budget sets, for example by ignoring the state individual income tax, could affect the variation in elasticities.