Children and Women's Participation Dynamics: Transitory and Long-Term Effects

34 Pages Posted: 16 Apr 2003

See all articles by Alexandru Voicu

Alexandru Voicu

City University of New York (CUNY) - College of Staten Island; IZA Institute of Labor Economics

Hielke Buddelmeyer

Melbourne Institute; IZA Institute of Labor Economics

Date Written: February 2003

Abstract

Children affect the after-birth labor force participation of women in two ways. Directly, the time spent in child-care reduces the labor market effort. The time spent out of the labor market while on maternity leave alters women's participation experience and, thus, indirectly affects subsequent participation behavior. This paper proposes a model that disentangles the direct and indirect effect of children on women's labor force participation, and evaluates their relative importance. Participation decisions on a three-state space - employed full-time, employed part-time, not employed - are represented by a multivariate probit model with a general correlation structure. The model allows for a high degree of flexibility in modeling the dependence of sequential decisions. The estimation is performed using Markov chain Monte Carlo methods. It is shown that the indirect effect, through time out of the labor market, is more important. The discrepancy is sharper for full-time employment and grows with the length of the interruption.

Keywords: Female Labor Supply, Multivariate Probit Model, Gibbs Sample

JEL Classification: C11, C15, J13, J22

Suggested Citation

Voicu, Alexandru and Buddelmeyer, Hielke, Children and Women's Participation Dynamics: Transitory and Long-Term Effects (February 2003). IZA Discussion Paper No. 729, Available at SSRN: https://ssrn.com/abstract=389360

Alexandru Voicu (Contact Author)

City University of New York (CUNY) - College of Staten Island ( email )

NY
United States
718-982-2899 (Phone)

HOME PAGE: http://www.library.csi.cuny.edu/~pep/voicu.htm

IZA Institute of Labor Economics ( email )

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Hielke Buddelmeyer

Melbourne Institute ( email )

161 Barry Street
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Parkville, Victoria 3010
Australia
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HOME PAGE: http://www.melbourneinstitute.com

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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