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Identifying the factors that influence labor force participation couldelucidate how individuals arrive at their labor supply decisions, whoseunderstanding is, in turn, of crucial importance in analyzing how the supplyside of the labor market functions. This paper investigates the effect ofparenthood status on Labor Force Participation (LFP) decisions using anindividual-level fixed-effects identification strategy. The differences acrossindividuals and over time in having or not having children as well as being ornot being in the labor force provide the variation needed to assess theassociation between individuals' LFP behavior and parenthood. Parenthood couldhave different impacts on mothers than it would on fathers. In order to look atthe causal effect of maternity and paternity on LFP separately, the data isdisaggregated by gender. To this end, the effect of a change in the parenthoodstatus can be measured using individual-level fixed-effects to account fortime-invariant characteristics of individuals becoming a parent. The primarydata source used is the National Longitudinal Surveys (NLS). Considering thenature of LFP variable, this paper employs Binary Response Models (BRMs) toestimate LFP equations using individual-level micro data. The findings of thestudy show that parenthood has a negative overall effect on LFP. However,paternity has a significant positive effect on the likelihood of being in thelabor force, whilst maternity has a significant negative impact of LFP. Inaddition, the results imply that the effect of parenthood on LFP has beenfading away over time, regardless of the gender of parents. These two pieces ofevidence precisely map onto the theoretical predictions made by the relatedmainstream economic theories (the traditional neoclassical theory of laborsupply as well as Becker's household production model). These results are ...

Identifying the Effect of Parenthood on Labor Force Participation: A Gender Comparison