The Impact of Child Quantity on Mothers’ Labour Market Outcomes in New Zealand
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Since the 1960s, the total fertility rate in New Zealand, much like in other developed countries, has declined, while the female labour market participation has increased. The link between labour supply and child quantity may explain increases in the female labour market participation rate if low child quantity results in higher labour force attachment. Previous New Zealand studies on the effects of childbearing on female labour supply suffer from a lack of reliable micro-data. Furthermore, past NZ-specific analyses also fail to account for a likely endogenous determination of child quantity, which can bias estimation of the main causal mechanisms of interest. In this dissertation, I estimate the causal effect of child quantity on maternal labour market outcomes. Following the empirical methodology adopted in the previous family size literature, I use twin births and parental preferences for mixed-sex siblings as plausible sources of exogenous variation in child quantity. I use population-based administrative data from Statistics New Zealand’s Integrated data infrastructure for my empirical analysis. Focusing on mothers of childbearing age (aged 18-45), the empirical analysis incorporates a two-stage least squared (2SLS) estimation strategy. I find that when using sources of exogenous variation, having additional children results in a reduction in labour market earnings and employment propensity. This negative effect is further substantiated by a decrease in the proportion of months worked and full-time employment propensity. Furthermore, using fixed effects regression, I also find that the probability of employment in a paid job (and level of labour market earnings) declines with each successive child. If having additional children results in increased time spent raising children, it is likely at the expense of leisure time as having an additional child has no effect on the labour outcomes of partners of mothers in this sample.