Affecting Children and the Effect of Children

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In the first half of my dissertation, I estimate the causal effect of a first child on female labor supply. This is a difficult task given the endogeneity of the fertility decision. Ideally, this question could be answered by running a social experiment where women are randomly assigned children or not. Using field data from the National Survey of Family Growth (NSFG), I mimic this hypothetic experiment by focusing on a sample of women that sought help to become pregnant. After a certain period since they started receiving help, only some of these women are successful. In this instance, fertility appears to be exogenous to labor supply in that pre-treatment labor supply is uncorrelated with subsequent fertility. Using this strategy, I estimate that having a first child younger than a year old reduces female labor supply by 26.3 percentage points. These estimates are close to OLS and fixed-effects estimates obtained from a panel data constructed from the NSFG. They are also close to OLS estimates obtained using similarly defined samples from the 1980 and 1990 Censuses.

The second part of my dissertation explores the problem of an educational authority who decides his revelation policy about students' educational attainments in order to maximize mean educational achievement. Incentives in an educational context are different from those in the marketplace. Schools cannot pay students to motivate them to attain higher levels of education. However, there is still a role for incentives. Since students care about which signal they can get from the school (pass/fail, GPA), the school has a tool to influence students' behavior. Using a theoretical model, I explore the optimal way to use this tool, i.e., the optimal way to reveal educational achievements. I find that this optimal revelation policy is dependent on the distribution of students with respect to ability. I show that this optimal scheme could be: a) classify individuals in two groups and just reveal this information, b) reveal all information, c) set a critical standard and group all individuals together below this level and provide full information about students' productivity above it.