labor supply and investment in child quality: a study of jewish and non-jewish women

Labor Supply and Investment in Child Quality: A Study of Jewish and Non-Jewish WomenAuthor(s): Barry R. ChiswickSource: The Review of Economics and Statistics, Vol. 68, No. 4 (Nov., 1986), pp. 700-703Published by: The MIT PressStable URL: http://www.jstor.org/stable/1924532 .

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700 THE REVIEW OF ECONOMICS AND STATISTICS

LABOR SUPPLY AND INVESTMENT IN CHILD QUALITY: A STUDY OF JEWISH AND NON-JEWISH WOMEN

Barry R. Chiswick*

Abstract-This paper is concerned with the effects of schooling and children on the labor supply of Jewish and non-Jewish women. The data are for second-generation Americans from the 1970 Census of Population. The "mother tongue" tech- nique is used to identify Jews. Jewish women are apparently making greater investments of their own time in producing child quality prior to and concurrent with schooling. Children have a greater depressing effect on the labor supply of Jewish than other women, while schooling has a larger positive effect. Jewish women with no children at home have a greater labor supply.

I. Introduction

Of the racial and ethnic minorities in the United States, American Jews are among the most successful. Investigation of several hypotheses that could explain their higher levels of schooling and earnings suggests that the success of American Jews may be related to greater parental investments made prior to and/or concurrent with formal schooling (Becker, 1981, p. 110; Chiswick, 1983, 1985). This paper provides a test for the hypothesis that Jewish parents make greater investments in their children's "home produced human capital" by looking at the relationship between the presence of children in the home and female labor supply.

Section II discusses the main hypotheses to be tested. Section III discusses the theoretical issues in labor supply relevant for this study and develops the estimating equations. Differences in the determinants of labor supply for Jewish and non-Jewish women are examined empirically in section IV. Section V is a summary and conclusion.

II. The Hypotheses

The objective is to test the hypothesis that Jewish parents make greater investments in their children's human capital prior to and/or concurrent with schooling. Parental time devoted to child care may be treated as an input in the production of child quality. Children are most parental time-intensive when they are young;

the time intensity declines with age and older children (i.e., teenagers and college-age children) may be relatively more goods intensive than time intensive.

In the absence of appropriate time budget data the complement of time in home production is studied. It is assumed that time in labor market activities is inversely proportional to parental time inputs in child care. Then investments in child quality can be studied through the testing of the following hypotheses:

(1) The presence of children in their home has a greater depressing effect on labor supply for Jewish women.

(2) The greater depressing effect of young children on labor supply is more intense for Jewish women.

(3) Jewish women with no young or school age children in the home would exhibit a greater labor supply.

It would be desirable to have data on parental investments when the current cohort of adults were children. These data are not available. An alternative approach is adopted here. It is assumed that the factors that in- fluence ethnic group differences in investment in child quality do not vary sharply from generation to generation. Then, contemporary data on parental investments in child quality can be used to address the issue.

III. The Labor Supply Estimating Equations

The population under study is white females age 25 to 64 in 1970 who were not enrolled in school, were born in the United States, but had at least one foreign- born parent. Three measures of labor supply are consid- ered:

(1) Whether the woman worked at least one week in 1969 (WORK69),

(2) The proportion of weeks she worked in 1969 (PCTWORK), and

(3) The number of hours worked in the reference week, the last week in March 1970 (HRSWK).

The difference between desired and actual employment in the reference period is relatively small as 1969 and early 1970 were periods of very low unemployment. Of the alternative dependent variables, hours worked is likely to be the poorest proxy of desired labor supply. It refers to only one week and may therefore be subject to

Received for publication May 7, 1984. Revision accepted for publication November 8, 1985.

*University of Illinois at Chicago. I appreciate the research assistance of Suchittra Cham-

nivichorn and the comments received from Carmel U. Chis- wick, Donald Cox, Evelyn Lehrer, Marianne Ferber and the two referees, and at seminars at Queen's University, Stanford University, University of California at Santa Barbara, and University of Illinois at Chicago.

Copyright ? 1986



NOTES 701

substantial measurement error, and it may reflect systematic seasonal patterns.

Three sets of variables determine female labor supply. These are real wage opportunities in the labor market, marginal productivity in home production, and income from sources other than the woman's labor market activities. There are no wage rate data for women who do not work, and wages are determined simultaneously with labor supply. These econometric problems are avoided by estimating a reduced form rather than a structural labor supply equation-the wage variable is replaced by the exogenous variables that determine wages.

Wages rise with the level of schooling and the number of years since leaving school and decline with the extent of interruptions in labor market activity. Thus, the labor supply equation includes schooling (EDUCATION) and age (AGE and its square) as well as marital status and family structure. Because of the effects on investment in on-the-job training of past labor supply and expected future behavior, wages would be greatest for women who never married (NEVERMAR) and least for married women living with their spouse (MARRSP). Past labor supply would be lower for women who have had a child (HA VCHILD) and the larger the number of children born (CHILDBN), and these women would be expected to have lower current wage opportunities.

Current productivity in home activities may also be measured by the marital status and children variables-those living with families having greater home productivity. Thus, labor supply would be lower for those currently married (MARRSP) and with children living at home. Because of the greater time intensity of younger children, the depressing effect on labor supply of children under 6 (CHILUN6) is hypothesized to be greater than that of children in the household age 6 to 18 (CH6TO18). The baby-sitting activities of teenage children may also mitigate negative effects on labor supply.

To control statistically for income effects on home productivity and leisure, family income from all sources other than the women's labor market earnings is in- cluded in the equation. This is measured by total family income minus the earnings of the woman (OTFAM- INC).

The empirical analysis uses ordinary least squares (OLS) regressions to estimate the reduced form equation.' Using one procedure for all of the analyses facili- tates comparisons among dependent variables. The OLS procedure permits estimation with extremely large sam-

ples (nearly 70,000 observations), thereby reducing sam- plng error.

IV. Empirical Analysis2

Recent studies have developed, tested and imple- mented an indirect procedure for identifying Jews in the 1970 Census using the question on the person's "mother tongue," that is, the language other than or in addition to English spoken in the home when the person was a child (Chiswick, 1983 and Kobin, 1983). Those who reported Yiddish or Hebrew are presumably nearly exclusively Jewish. While the procedure underestimates the number of Jews, it is not obvious that there are systematic differences between identified and non-identified Jews.

Among the adult white women in 1970 who were second-generation Americans, 5.6% reported a typically Jewish mother tongue. The Jewish women were more likely to have worked in the previous year (57% compared to 53%) and to have worked in a larger proportion of the weeks (45% compared to 42% of the weeks). This implies about 7% greater labor supply. The differences in hours worked in the reference week, however, are much smaller (15.4 hours for the Jewish women, and 15.2 for the others).

Some of the characteristics (explanatory variables) of Jewish women would encourage a greater labor supply. The Jewish women have more schooling (by 1.4 years), and are more urbanized. On average, they have fewer children under 6 (0.12 compared to 0.21 for non-Jews) and fewer children 6 to 18 years living in the household (0.63 compared to 0.88).

On the other hand, three variables would encourage a smaller labor supply. A larger proportion of the Jewish women are currently married (80% compared to 75% married, spouse present) and have ever had a child (84% compared to 81%). The Jewish women have higher family income from sources other than their own earnings ($15,400 compared to $11,200 in 1969).

The regression analyses indicate that for each of the three measures, labor supply is higher for women with more schooling, increases (but at a decreasing rate) with age, is lower in rural areas and in the south, is higher for women not currently married, is greatest for never-married women, and declines with other family income. The signs of the coefficients are the same for the Jewish and non-Jewish analyses and the coefficients are highly significant.

Other things the same, Jewish women appear to have a greater labor supply. Regressions computed using pooled data on Jews and non-Jews indicate the Jewish

1 When the average value of a dichotomous variable is around 0.5, as is the case in this study, OLS tends to give results which are very similar to probit and logit. See, for example, Pindyck and Rubinfeld (1981), pp. 278-279.

2 For the det-ailed tables of means and standard deviations and the full regression equations, see the Statistical Appendix, available upon request from the author.



702 THE REVIEW OF ECONOMICS AND STATISTICS

TABLE 1.-REGRESSION ANALYSIS OF LABOR SUPPLY, SELECTED COEFFICIENTS, 1970a

Dependent Variable

Labor Force Percent of Weeks Participation Worked Hours Worked (WORK69) (PCTWORK) (HRSWK)

Independent Non- Non- Non- Variable Jewish Jewish Jewish Jewish Jewish Jewish

EDUCA TION 0.025 0.037 0.020 0.029 0.838 0.974 (35.5) (12.2) (33.3) (10.5) (32.9) (8.8)

HA VCHILD -0.031 -0.011 -0.046 -0.037 -2.276 -2.531 (-4.7) (-0.4) (-8.0) (-1.3) (-9.5) (-2.2)

CHILDBN 0.002 0.016 0.0006 0.013 0.150 0.890 (1.5) (1.6) (0.4) (1.5) (2.7) (2.5)

CHILUN6 -0.138 -0.264 -0.117 -0.197 -4.598 -6.913 (-34.8) (-11.5) (-33.7) (-9.6) (-31.4) (- 8.3)

CH6TO18 -0.037 -0.062 -0.041 -0.070 -1.60 -2.861 (-18.1) (-5.9) (-22.9) (-7.5) (-21.4) (-7.5)

Source: Statistical Appendix, tables A-4 to A-6, columns 2 and 3. 'Partial effects of education and children variables, controlling for AGE, AGESQ, SPOUSEAB (married, spouse absent), WIDOWED, NEVERMAR,

geographic area (RURALEQI, SOUTHEQI), and other family income (OTFAMINC). Separate regression for Jewish and non-Jewish women.

women are more likely to have worked in 1969 by 1.7 percentage points (t = 2.1), and worked 1% more weeks (t = 1.4), but they worked a shorter week (by 0.5 hours, t = 1.8). Thus, most of the observed greater labor supply (as measured by weeks worked) can be attributed to the independent variables.

There are some important differences in the partial effects of the explanatory variables (table 1). The coeffi- cient of the education variable is about 50% larger for Jewish women than for other women for the two measures of labor supply in 1969 (worked in 1969 and percentage of weeks worked). This may reflect the greater labor market returns from schooling among American Jews or a greater sensitivity to the improved labor market opportunities provided by a higher level of education (Chiswick, 1983). There is no significant difference in the education effect for the hours analysis. The effect of other family income appears to be the same for Jewish and non-Jewish women.

Among those who have had a child, the effect on labor supply of the number and age structure of the children appears to differ (table 1). These differences are highly statistically significant and they appear whether separate regressions are computed or whether interaction variables are used in a pooled regression. The depressing effect on labor supply of children under 6 is much larger for Jewish women. A child under 6 reduces the probability of working in 1969 by about 14 percentage points for non-Jewish women and by about 26 percentage points for Jewish women. It reduces the proportion of weeks worked by about 12 percentage points for non-Jewish women and by about 20 percentage points for Jewish women. A child under age 6

reduces the number of hours worked in the reference week-by 4.6 hours for the non-Jewish women and by 6.9 hours for the Jewish women.

A comparable pattern emerges for children 6 to 18, although their depressing effect on labor supply is smaller (table 1). Children age 6 to 18 lower the probability of working by 3.7 percentage points per child for the non-Jewish women and by 6.2 percentage points for the Jewish women, the proportion of weeks worked is lower by 4 percentage points and 7 percentage points, respectively. The hours effect is 1.6 hours for non-Jewish women and nearly 3 hours for Jewish women.

An interesting pattern emerges for all three measures of labor supply when childless women are compared to women who have had children, but with no children under 18 currently living at home. Among the non- Jewish women, labor force participation (worked in 1969) for women with adult children is lower by 3 percentage points compared to those who never had a child, and each additional child has an insignificant effect on current labor supply. This may reflect the effects of a lower earnings potential because of the smaller past labor supply. Among the Jewish women, however, there is no difference in labor force participation between those who never had a child and those with one child over age 18. And, labor force participation rises with the number of children ever born. This implies that whatever depressing effects on current wages previous labor force absence may have, it is offset by some other factor. This other factor is not simply an "income effect" of a larger family (income per person is lower) as income effects appear to be the same across religious groups. It may, however, reflect a greater re-



NOTES 703

TABLE 2.-DIFFERENCES IN LABOR FORCE PARTICIPATION BETWEEN JEWISH AND NON-JEWISH WOMEN BY EDUCATION AND NUMBER OF CHILDREN IN THE HOUSEHOLD, 1970a,b

(Jewish minus non-Jewish, percentage points)

Number of Children in Household Two Children

Education One Child Two One Under 6 Two (years) None Under 6 6-18 Under 6 One 6-18 years 6-18 years

10 +1.7 -10.9 - 3.4 - 23.5 -13.0 - 5.5 12 + 3.9 - 8.7 +1.9 -21.3 -10.8 -0.2 16 + 8.4 -4.2 +6.3 -16.8 -6.3 +4.2

Source: Statistical Appendix, table A-4, column 2. aComputed from a pooled Jewish-non-Jewish regression of labor force participation (WORK69) on A GE,

AGESQ, EDUCATION, SPOUSEAB (married spouse absent), WIDOWED, NEVERMAR, other family income (OTFAMINC), geographic area (RURALEQI, SOUTHEQI), HA VCHILD, CHILDBN, CHILUN6, CH6TO18, JEWISH and the interaction of the Jewish variable with EDUCATION and the four variables for children. b The observed difference is + 3.5 and the difference ceteris paribus is + 1.7.

sponsiveness to the more goods-intensive nature of older children.3

Table 2 presents in summary fashion the difference in the proportion of Jewish and non-Jewish women who worked in 1969. The overall difference of 3.5 percentage points is reduced to 1.7 percentage points when other variables are the same. Within each category for number of children, the labor supply of Jewish women relative to other women increases with the level of education. Within schooling levels, the Jewish women have lower labor supply relative to other women the larger the number and the younger the age of the children. Thus, Jewish women without children at home have a greater labor supply, and the relative difference rises with their schooling level. However, the greater the number and the younger the age of their children, the more likely are Jewish women to withdraw from the labor force relative to other women.

The labor supply equations were also estimated delet- ing observations with zero weeks or hours of work. Among those who worked, there is no significant effect of children under age 6 on Jewish-non-Jewish differences in labor supply. Children age 6 to 18, however, have a greater depressing effect on weeks and hours worked among Jewish than among non-Jewish women. The implication is that as children reach school age more mothers return to work, but Jewish mothers who return to the labor market work fewer weeks in the year and fewer hours in the week.

V. Summary and Conclusion

Other things the same, including other family income, Jewish women have a lower labor supply than other

women if there are young children (under age 6) in the home. Children age 6 to 18 also have a greater depressing effect on the labor supply of Jewish women, both in terms of participating at all and the extent of work (weeks and hours) for those who work. Among women without children at home, those who are Jewish are more likely to work. Jewish women respond more sharply to the favorable effect of schooling on labor supply. As a result, Jewish women without children at home or, if they are high school graduates with only one child age 6 to 18, are more likely to participate in the labor market than non-Jewish women, and the differen- tial rises with the level of schooling.

The observed labor supply behavior is consistent with the hypothesis that Jewish mothers make greater investments of their own time in the home-produced human capital of their children when their children are time intensive and they work more when their children are goods intensive.

REFERENCES

Becker, Gary S., A Treatise on the Family (Cambridge: Harvard University Press, 1981).

Catsiapis, George, and Chris Robinson, "The Theory of the Family and Intergenerational Mobility: An Empirical Test," Journal of Human Resources 16 (Winter 1981), 106-116.

Chiswick, Barry R., " The Earnings and Human Capital of American Jews," Journal of Human Resources 18 (Summer 1983), 313-336. , "The Labor Market Status of American Jews: Pat- terns and Determinants," American Jewish Year Book, 1985 (1985), 131-153.

Kobin, Frances E., "National Data on American Jewry, 1970-71: A Comparative Evaluation of the Census Yiddish Mother Tongue Subpopulation and the Na- tional Jewish Population Survey," in U. 0. Schmelz, et al. (eds.), Papers in Jewish Demography (Jerusalem: Hebrew University, 1983), 129-143.

Pindyck, Robert S., and Daniel L. Rubinfeld, Econometric Models and Economic Forecasts, 2nd edition (New York: McGraw Hill, 1981).

3 Catsiapis and Robinson (1981) show that among unmarried post-secondary school students, Jewish parents make much larger financial contributions than do other parents, even after controlling for family income and the receipt of scholarships and grants.



labor supply and investment in child quality: a study of jewish and non-jewish women

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