Measuring the Negative Effect of Fertility on Female Labor Supply: the Use of 2001' National Survey of Family Income and Expenditures

Abstract

The labor force participation(LFP) of married women in Korea has increased sharply since the 1980s. The aim of this paper is to estimate the effect of fertility on the decision of labor force participation of married women in Korea. The instrumental variable (IV) method is employed to resolve possible endogeneity between fertility and LFP decision by married women. We find that the sex of the first child would be a good IV for the fertility. Estimation results suggest that having a child reduces the LFP of married women by 30.7%. This figure is much larger than the negative effect of the sibling estimated through simple logit model. Our empirical results imply that affordable childcare facilities and various part-time jobs will help married women to participate in the labor market.