China sees an absolute decline in its working-age population because of its implementation of the one-child policy for over 30 years, coupled with a sharp decrease in fertility desire. An increase in the labor supply of married women can effectively relieve the pressure from demographic liabilities China are going to face on a short-term basis. Since 2015, the Chinese government has carried out the universal two-child policy, when more and more families will have their second child. The growing number of young children, on the one hand, will increase the financial burden of families, urging the mothers to go out to work; on the other hand, it will increase their pressure to take care of young children, hindering them to enter the labor market. This paper presents an exploration into how married women opt for between families and work under such background, and the assessment of the influences of residential patterns on their labor supply in China. Different from most of the current literature, this paper involves a perspective of child care. On this basis, studies are made into how to share the pressure of married women to look after their young children when living together with the old at home so that the influences are discussed on their labor supply. There may be endogeneity between the selection of residential patterns and the labor supply of married women. In consideration of this factor, an approach of Special Regressor Method is adopted in this paper during the empirical analysis to improve the deficiencies of the current literature in the econometrics method. This is also the main contribution of this paper. First of all, a theoretical analytical framework is built in this paper to explain how married women determine their time allocation and how residential patterns affect the labor supply. Through the comparative static analysis, it is found that living with the old at home can improve the labor supply of married women. Then, because the selection of residential patterns and labor participation of married women are both dummy variables, it is difficult for the IV-Probit regression approach to effectively solve the endogeneity between them. The Special Regressor Method is used in the part of the empirical analysis to solve the problem of binary choice models with discrete endogenous regressors. This paper also covers a consideration that the impact of residential patterns on the labor participation of married women may present heterogeneity of the number of young children. Using the 2011 data of " China Household Finance Survey”, it is found that living with the old at home can significantly enhance the labor participation rate of married women in China, with the rising range of 49 percent. This result can be perceived as the causal effect between the two sides, and it exerts the most obvious influence on the women with only one young child. Finally, whether married women take the job is their own selection. In view of this fact, it is found with the Tobit regression method that living together with the old will also significantly extend the weekly working hours of married women to 4 hours, with the growth rate of 8.26 percent. Based on the research results of this paper, the ordinary families in China should be more open-minded to " living together among generations”. This can prompt more married women enter the labor market, improve the financial situation of their families while having more time to take care of their young children. Moreover, the Chinese government should encourage " living together among generations” through publicity and economic support to the benefit of improving the labor supply of China.
Residential Patterns，the Number of Young Children and the Labor Supply of Married Women：From the Perspective of Child Care
Journal of Finance and Economics Vol. 45, Issue 06, pp. 57 - 70 (2019) DOI:10.16538/j.cnki.jfe.2019.06.005
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Cite this article
Sun Jisheng, Zhou Yahong. Residential Patterns，the Number of Young Children and the Labor Supply of Married Women：From the Perspective of Child Care[J]. Journal of Finance and Economics, 2019, 45(6): 57-70.