Younger children and mothers’ labour supply in rural India: Evidence from fertility stopping behaviour

Abstract

This paper estimates the causal effect of having young children aged 0–5 years on mothers’ labour force participation in rural India. To address the potential endogeneity in the fertility decision, I exploit Indian families’ preference for having sons. I leverage exogenous variation in the gender of older children aged 6 + years as an instrumental variable for having younger children aged 0–5 years in the family. IV estimates show that the mothers’ participation is significantly reduced by 9.9% due to the presence of young children aged 0–5 years in the household, with the negative effect mostly driven by mothers belonging to the highest income quartile; mothers with high education; and mothers residing in nuclear families. The findings highlight the need for investment in high-skilled jobs and formal childcare facilities to encourage mothers’ labour supply. Using the testable implications for the generalizability of LATE discussed in Angrist (The Economic Journal, 114: C52 C83, 2004), I show that the estimated causal effect is homogenous across compliers, always takers, and never takers and thus, generalizable to the whole population of interest.