Labor Market Activities and Fertility

1. Labor Market Activities and Fertility David E. Sahn and Stephen D. Younger

2. In poor countries women: have high fertility have high IMR/CMR have low education and high morbidity (as do their children) work at home in agriculture in informal self-employment In rich countries, women: have low fertility have low IMR/CMR have high education and low morbidity (as do their children) work away from home formal wage jobs Introduction

3. Introduction • Relations between these factors are complex, with important feedbacks, both static and dynamic • Here, our focus is on how women's labor market activity relates to the other factors, especially fertility and investments in children

4. Policy Relevance • New employment opportunities for women can reduce fertility • Induced reductions in fertility can increase women’s employment • Both factors can lead to a demographic transition and to poverty reduction

5. Fertility/Work Trade-Off Labor Market Activity Fertility (Child Quantity)

6. Fertility/Work Trade-Off • Raising children is “women’s work” in Africa (and elsewhere) • Incompatibility of having children with work outside the home in formal wage employment • no “joint production” • inflexible hours in formal jobs • Other household members may ease this trade-off • extended family (grandmothers) • older daughters (child labor)

7. Child Quantity/Quality Trade-Off Labor Market Activity Fertility (Child Quantity) Investments in Children (Child Quality)

8. Child “Quantity/Quality” Trade-Off • A key feature in the economic approach to demography and development (Becker/Lewis) • substitution effects are exceptionally strong • gross complementarity of work and investments in children • Brings in a dynamic, intergenerational aspect • Today’s well-educated and healthy children are tomorrow’s parents • parental education and income are clearly linked to fertility, labor market choices, and their own children’s human capital

9. Thinking About Causality • Work opportunities • Growth/development • Wages • Reproductive Health Services • Child Care Services Labor Market Activity Fertility (Child Quantity) • Education • Incomes (ex. mother) • Norms and customs Investments in Children (Child Quality) School fees Public Health Services Health care costs

10. Thinking About Causality • Work opportunities • Growth/development • Wages • Reproductive Health Services • Child Care Services Labor Market Activity Fertility (Child Quantity) • Education • Incomes (ex. mother) • Norms and customs Investments in Children (Child Quality) School fees Public Health Services Health care costs

11. Labor Market Opportunities • Effect of wage rates on women’s time allocation, fertility, and investments in children • substitution effect • income effect • note interaction of education with this effect • Effect of job opportunities • in rural Africa, opportunities for out-of-home work are limited • some industries prefer female employees • textiles/garments • cut flowers

12. Thinking About Causality • Work opportunities • Growth/development • Wages • Reproductive Health Services • Child Care Services Labor Market Activity Fertility (Child Quantity) • Education • Incomes (ex. mother) • Norms and customs Investments in Children (Child Quality) School fees Public Health Services Health care costs

13. Thinking About Causality • Work opportunities • Growth/development • Wages • Reproductive Health Services • Child Care Services Labor Market Activity Fertility (Child Quantity) • Education • Incomes (ex. mother) • Norms and customs Investments in Children (Child Quality) School fees Public Health Services Health care costs

14. (Shadow) Costs of Child Quality • Fees for health services • School fees • For example, many African countries have recently eliminated school fees. What has been the impact on fertility, women’s labor market activity, and investment in children? • Clean water and other public health services

15. Thinking About Causality • Work opportunities • Growth/development • Wages • Reproductive Health Services • Child Care Services Labor Market Activity Fertility (Child Quantity) • Education • Incomes (ex. mother) • Norms and customs Investments in Children (Child Quality) School fees Public Health Services Health care costs

16. Other Conditioning Factors • Education • increases market wages (see argument above) • may affect attitudes and norms • but may be jointly determined if women are forward-looking • may also be endogenous, if pregnancy ends schooling

17. Other Conditioning Factors • Income from sources other than the mother • Attitudes, norms, and customs • key part of “modernization” theory • may have powerful interactions with other causal variables

18. Research Ideas – Survey Data • Use survey data to estimate the impact of wage rates and/or labor market conditions on work, fertility, and investments in children • Lam and Anderson (2002) in South Africa • Use survey data to estimate the impact of “fertility shocks” on labor force participation and investments in children • “twins shock” - Rozensweig and Wolpin (1980) • “unwanted births” – Lloyd, et.al. (2006) • Many other analogous possibilities for any of the exogenous variables in the diagram

19. Research Ideas – Field Experiments • Very popular in development economics these days • Avoids the econometric problems that plague survey research • Example: randomized delivery of community and reproductive health services in Northern Ghana – Niagia (2005)

20. Research ideas – Case Studies on Impact of Economic Development • Difficult to investigate interesting questions of effect of economic development on employment, fertility and human capital • Consider conducting case studies • Grameen Bank-style microcredit • Impact of export processing zones on fertility and female labor force participation in Mauritius - Bheenick and Shapiro (1989)

21. Research Ideas – Dynamics • Intergenerational Dynamics • models so far are static – decisions for a woman or family at one point in time • Child Labor • may help to relax a mother’s binding time constraint that is key to many arguments • but at the cost of another vicious circle

22. Concluding Thoughts and Extensions • Very little of any of this type of research in Africa – the field looks wide open • Vast opportunities for AERC network