Abstract
Twin births are often used to instrument fertility to address (negative) selection of women into fertility. However recent work shows positive selection of women into twin birth. Thus, while OLS estimates will tend to be downward biased, twin-IV estimates will tend to be upward biased. This is pertinent given the emerging consensus that fertility has limited impacts on women's labour supply, or on investments in children. Using data for developing countries and the United States, we demonstrate the nature and size of the bias in the twin-IV estimator of the quantity-quality trade-off and estimate bounds on the true parameter.
Highlights
Following Becker (1960), fertility has been modeled jointly with each of investments in children, and women’s labour force participation
We provide estimates for the United States using about 225,000 births, drawn from the US National Health Interview Surveys (NHIS) for 2004–2014, and for a pooled sample of developing countries, containing more than 1 million births in 68 countries over 20 years, available from the Demographic and Health Surveys (DHS)
In the United States, for which data on this additional investment are available, we find that college-educated women compensate the endowment when reading with the child
Summary
Following Becker (1960), fertility has been modeled jointly with each of investments in children, and women’s labour force participation. On account of the average tendency for negative selection into high fertility, linear least squares estimates of the association of fertility with children’s human capital, or with women’s employment tend to be downward biased (that is, to be “too negative” or to over-estimate the trade-off). Since the pioneering work of Rosenzweig and Wolpin (1980a,b), a considerable literature has attempted to address this by using twins to instrument fertility. The editor in charge of this paper was Imran Rasul
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