published in: American Economic Journal : Applied Economics, 2009, 1(1), 251-272
A mother’s decision to participate in the labour market is correlated with those of the other mothers living in the same neighbourhood. This paper studies the extent to which this is causal. An identification problem exists because mothers with similar characteristics are often observed living in close proximity. Our identifying strategy uses instrumental variables. Specifically, the sex of the eldest siblings of the other mothers living in the neighbourhood is used as an instrument to identify the effect of neighbours’ participation in the labour market on own participation. The IV estimate suggests a strong elasticity of own participation to neighbours participation. Interestingly enough, estimates using the quarters of birth of the children of the other mothers living in the neighbourhood as instruments are as large as estimates using the sex-mix instruments. We provide additional evidence showing that the random fertility shocks that affect the timing of births and the participation in the labour market of a mother, affect the participation in the labour market of the other mothers in the neighbourhood too.
We use cookies to provide you with an optimal website experience. This includes cookies that are necessary for the operation of the site as well as cookies that are only used for anonymous statistical purposes, for comfort settings or to display personalized content. You can decide for yourself which categories you want to allow. Please note that based on your settings, you may not be able to use all of the site's functions.
Cookie settings
These necessary cookies are required to activate the core functionality of the website. An opt-out from these technologies is not available.
In order to further improve our offer and our website, we collect anonymous data for statistics and analyses. With the help of these cookies we can, for example, determine the number of visitors and the effect of certain pages on our website and optimize our content.