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

Introduction 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 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

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

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

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)

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

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

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

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

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

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

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

(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

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

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

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

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

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)

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)

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

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