Female Labour Supply and Fertility at the Extensive Margin

Abstract: This paper studies the female labour supply response to fertility at the extensive margin. The strategy pursued in this analysis is to identify two groups of childless women who utilized family planning services for the first time, one group for help with pregnancy and one group for help with contraception. The identification strategy is meant to resemble a natural experiment where actual treatment of a child within 21 months from the family planning service is as good as random among women in the two samples. The results of this paper indicate strong and negative fertility effects, with dissipating importance as age and years of education increases. It is argued that the assumption on randomness holds, and that the observed differences in employment status between the treatment groups can be interpreted as the causal impact of having a first child (below age one) on female labour supply. Further, the stability of the results between the two different samples suggests strong external validity.