The Impact of Social Policy and Economic Activity Throughout the Fertility Decision Tree

This paper considers the impact of changes in abortion and welfare policies along with economic conditions over the 1985 to 1996 period at each stage of the fertility decision tree, including sexual activity, contraception, pregnancy, abortion, and birth. Examining the impact of policy at each stage of the decision tree represents a useful approach because consistent findings provide stronger evidence of a causal link than focusing on just one stage. The abortion policies considered are parental involvement laws and mandatory waiting periods; welfare policies include benefit generosity as well as state-level welfare waivers as a whole and the 'family cap.' State-level data over this period are used to examine abortion, birth, and pregnancy outcomes, while microdata from the 1988 and 1995 National Surveys of Family Growth are employed to examine sexual activity and contraception. For those policies that target certain subgroups of the population, estimates are provided separately for each group and compared to help further identify causality. I find that parental involvement laws increase contraception use among minors, leading to fewer pregnancies and, therefore, fewer abortions; teen births do not rise in response. Evidence regarding welfare policies does not consistently support any impact throughout the decision tree.

Abortion as Insurance

This paper views abortion access as an insurance policy that protects women from unwanted pregnancies. Within this framework, we present a theoretical model where greater access provides value in the form of insurance against unwanted births and also reduces the incentive to avoid pregnancy. This model predicts that legalized abortion should lead to a reduction in the likelihood of giving birth. It also predicts that if abortion access becomes relatively inexpensive (including both monetary and psychic costs), then pregnancies would rise and births would remain unchanged or may even rise as well. We review the evidence on the impact of changes in abortion policy mainly from the United States and find support for both predictions. Then we test these hypotheses using recent changes in abortion policy in several Eastern European countries. We find that countries which changed from very restrictive to liberal abortion laws experienced a large reduction in births, highlighting the insurance value. Changes from modest restrictions to abortion available upon request, however, led to no such change in births despite large increases in abortions, indicating that pregnancies rose as well. These findings are consistent with the incentive effect implications of our model.

Expected Changes in the Workforce and Implications for Labor Markets

[Excerpt] While many have written about possible effects of the baby boom on the U.S. economy, few have recognized that this demographic transition provides analysts with a unique and valuable opportunity to investigate how the labor market works. Specifically, as baby boomers move up the age distribution, they impart a one-time shock to the supply of potential workers in each age bracket. Because this change is exogenous, many of the tools labor economists typically apply can be utilized to predict how the aging of the baby boom will alter key labor market outcomes. Theoretical and empirical models which (either implicitly or explicitly) hold constant structural parameters in order to work through the effects of an exogenous shock are well-suited to address this issue

Socioeconomic Disadvantage and Early Childbearing

We examine the empirical relationship between socioeconomic disadvantage and rates of early childbearing. First, we use data from the Panel Study of Income Dynamics (PSID) to confirm a strong correlation at the individual level - women who grow up "disadvantaged" are much more likely to give birth as teens. Then we aggregate Vital Statistics microdata from 1968 through 2003 to conduct a cohort-based analysis of the relationship between rates of socioeconomic disadvantage of a birth cohort and the cohort's subsequent early childbearing experiences. Our cohort level analysis implies an even tighter intergenerational correlation between rates of background disadvantage and early childbearing. But, when our analysis econometrically controls for fixed state and year of birth effects in the model to account for cultural and other differences across cohorts, the relationship between rates of disadvantage and early childbearing is found to be quite modest. For example, the elasticity of early childbearing rates by age 18 with respect to the probability of being born to a mother under age 18 is only 0.05. This suggests that broader, societal forces are far more important in determining rates of early childbearing than rates of socioeconomic disadvantage per se.

Labor Market Shocks and Retirement: Do Government Programs Matter?

This paper examines how unemployment affects retirement and whether the Unemployment Insurance (UI) system and Social Security (SS) system affect how older workers respond to labor market shocks. To do so, we use pooled cross-sectional data from the March Current Population Survey (CPS) as well as March CPS files matched between one year and the next and longitudinal data from the Health and Retirement Survey (HRS). We find that downturns in the labor market increase retirement transitions. The magnitude of this effect is comparable to that associated with moderate changes in financial incentives to retire and to the threat of a health shock to which older workers are exposed. Interestingly, retirements only increase in response to an economic downturn once workers become SS-eligible, suggesting that retirement benefits may help alleviate the income loss associated with a weak labor market. We also estimate the impact of UI generosity on retirement and find little consistent evidence of an effect. This suggests that in some ways SS may serve as a more effective form of unemployment insurance for older workers than UI.