Gregory Veramendi, University of London, Royal Holloway

The Labor Market Returns to Delaying Pregnancy

Abstract

We study the extent to which delaying pregnancy mitigates the impact of children on women's labor market outcomes. We leverage quasi-random variation in the timing of pregnancy in a setting where women intend to delay having children by using long-acting reversible contraceptives. While most women successfully delay pregnancy, some have unplanned pregnancies. Analyzing linked health and labor market data from Sweden, we find that unplanned pregnancies halt women’s career progression resulting in income losses of 20% by five years after the unplanned pregnancy. Using pregnancy as an instrument for birth in a dynamic treatment effect framework, the detrimental effects of unplanned children are larger for younger women and women enrolled in education. This indicates that unplanned first births are particularly disruptive early on when women are investing in their human capital. In contrast, we find smaller impacts of unplanned pregnancies for women who are already mothers. When we estimate the impact of first births identified from quasi-random success of fertilization procedures, we likewise find smaller impacts of children among women who intend to get pregnant. Taken together, our results suggest that the value of effective contraceptives is highest for women without children, and women can reduce the large labor market costs of having their first child by timing pregnancy.

Gregory Veramendi is an Associate Professor for the Department of Economics at Royal Holloway, University of London and a Ifs Research Associate.

You can read more about Gregory Veramendi and his research here

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