The Effects of Child-Bearing on Married Women's Labor Supply and Earnings: Using Twin Births as a Natural Experiment

Abstract

Married women's decisions about child-bearing and market work are importantly interrelated. Although there are many estimates of the effects of fertility on female labor supply few of them have adequately addressed the problems of simultaneity inherent in these choices. In this paper, we use exogenous variations in fertility due to twin births to measure the impact of an unanticipated child on married women's labor supply and earnings. We find that the short-run effects of an unanticipated birth on labor supply are appreciable and have increased in magnitude as more mothers enter the labor market. It also appears that the impact of unanticipated births on earnings and wages has changed from 1980 to 1990. In 1980 reduced labor supply caused a temporary drop in earnings, but in 1990 earnings and wages remained depressed well after the labor supply effects of a twin birth had disappeared.