Effect of fertility on female labour force participation in the United Kingdom

Summary

This article aims to estimate the causal effect of fertility on the
labour force participation of British women. In order
to account for the possible endogeneity of
fertility variables, the sex composition of the two previous children of
a mother
has been used as an instrument for fertility. The
Two-stage Residual Inclusion (2SRI) estimation method is used on a
relatively
new British data set—‘Understanding Society’. The
results suggest that fertility is indeed endogenous to the labour force
participation decisions of women in the sample, and
that not accounting for the endogeneity of the fertility variable leads
to an exaggeration of the negative effect of
fertility on female labour force participation. Important policy
recommendations
are drawn from the results.