Children and female labor market outcomes in Vietnam

This paper examines the effect of fertility on the participation of women in the labor market and other labor market outcomes in Vietnam, using Vietnam Labor Force Survey data. To address the endogeneity issue in fertility, we use an instrumental variable estimation method based on parental preference for the mixed-sex composition of the first two children. Our findings indicate that number of children has a negative impact on maternal participation in the labor market and on working hours but has no effect on earnings. We find that the effect on participation in the market is important for younger women aged 21-35 years but insignificant for older women aged 36-50 years. The older group responds by reducing their working hours rather than leaving the labor force. Our results support the position that the rise in female participation in the labor force in Vietnam can be partially attributed to the overall decline in fertility during the last three decades and helps validate the Vietnamese government's planning policy.