Children and the Labor Force Participation and Earnings of Parents in the Philippines

Abstract

How children affects the labor force participation and earnings of mothers and fathers can spell the difference on whether additional children can expect the needed care or not. When parents exert more effort with additional children, then their impact of on the welfare of the family will be mitigated. When the opposite happens, not only will additional children not get the needed support, they will also cause the deterioration of welfare of the other members of the household as resources are spread to more members. It is therefore important to quantify the impact of children on the work effort and earnings of their parents. Even though the average education of women in the Philippines is higher, their labor force participation is significantly lower than her Asian neighbors. One explanation that can be put forward is, of course, the inconsistent growth rate the country has been experiencing for a couple of decades now. Another, perhaps commonly forgotten reason, is that while her neighbors have successfully brought down their fertility rates, the Philippines has failed to reduced its fertility rate as fast as say Thailand, Indonesia and Viet Nam. The burden of many children can limit the ability of mothers to avail of work opportunities thus stalling the rise in the work uptake of Filipino women. This paper formulates and estimates a model of the determinants of the labor force participation and earnings of mothers and fathers with the number of children as one the explanatory variables that include individual, household and community characteristics. It uses the nationally representative 2002 Annual Poverty Indicators Survey in the analysis. This is one of the few papers that recognized and thoroughly tested the endogeneity of the children in these equations. This, however, did not produce positive results with the dataset used. This result lends support to the validity of using estimates that consider the number of children exogenous in the data set used for the study. The estimation generated rich results that provided quantitative estimates of the impact of children on the labor force participation and earnings of parents. The estimates point to a highly regressive impact of additional children on Philippine households.