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A model of the joint determination of labor force participation and fertility decisions of married women Mazany, Robin Leigh


In this dissertation, we examine the economic determinants of the labor force participation and fertility behavior of married women using a simultaneous equations model. The model takes into account both the truncation of hours of work at zero and the dichotomous nature of the decision of whether to have a child. We estimate the model using maximum likelihood methods. The data used are from the Michigan Panel Survey of Income Dynamics. We find the results from the simultaneous model to be quite different from the results obtained using single equation methods. Our results thus suggest a simultaneous framework is the most appropriate for the examination of labor force participation and fertility decisions. We run simulations on two different tax policies which might be expected to affect both the labor supply decision and the fertility decision. We find the tax policies do not have a large effect on either decision, although the effect on hours worked is stronger than the effect on fertility. We also find the effects of the policies to be stronger if there are already two children in the family.

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