Summary and Policy Implications

The paper presented and estimated a model of the determinants of the labor force participation and the earnings of parents with the number of children as one of the determinants among the usual individual, household and community characteristics. The estimation strategy tests first for the endogeneity of the number of children as suggested in the literature using the sex of the first two births as instruments, as suggested in Angrist and Evan (1998). Using both two-stage probit and FIML, the tests failed to establish the endogeneity of the number of children in the data set in the labor force participation equation. Similarly, using two-stage tobit, the endogeneity of the number of children in the earnings equations was also not substantiated. These results lend support to the use of the simple probit results in the labor force participation equation and simple tobit in the earning equations.

The results show that on average the impact of children is negative on the labor force participation of mothers and insignificant in the labor force participation of fathers. To determine the differential impact across income quintile, the number of children was interacted with the per capita income quintile dummy variables. This generated a richer result. It was shown that the negative impact of children on the labor force participation of mothers is only found in the bottom three quintiles. For the top two quintiles the impact is positive. Perhaps the mothers in the top quintiles are able to pay for child-care, e.g., house helps, so they are free to work even with additional children. In the case of fathers, the impact is insignificant only in the bottom quintile. In the upper four quintiles the impact is positive, i.e., fathers work more with additional children. In relative terms, the impact in the case of the fathers is much more subdued than it is with the mothers, which is not surprising given that mothers have the primary responsibility in child rearing. Turning to the impact on earnings, the average impact is again negative for mothers, but this time positive for fathers. The negative impact on earnings is only found in the bottom two quintiles, while in the top three quintiles the impact is positive. For fathers, even though the average impact is positive, the impact on the bottom quintile is still negative. The positive impact for the upper four quintiles accelerates as one goes up the income quintiles.

From the foregoing, it appears that there is a regressive impact of additional children on the labor force participation and earnings of parents. Combining the results on earnings, the bottom quintile has a double negative impact with each additional child --the mother as well as the father has reduced wage income. For the lower middle quintile, there is an offsetting effect, although the increase in the father’s income is not enough to cover the loss in the mother’s income. For the upper three quintiles there is a double positive income effect.

The results point to important implications for policy. Owing the regressive impact of additional children, government needs to train family planning assistance at the bottom quintile where there is double negative impact of additional children. In the short run there is a need to assist this group in achieving their fertility goals. Advocating for smaller family size maybe necessary in the long run. The design of any employment or livelihood assistance needs to consider the burden of children, in general, and preschool children, in particular, as these are shown in this paper to limit the ability of mothers to take up work.

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