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Essaysinfamilyandlabour economics - Research economics Yiyang Luo AthesissubmittedfortheDegreeof...

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  • Essays in family and labour

    economics

    Yiyang Luo

    A thesis submitted for the Degree of

    Doctor of Philosophy

    Department of Economics

    University of Essex

    February 2017

    mailto:yluoe@essex.ac.ukhttp://www.essex.ac.uk/economics/http://www.essex.ac.uk/

  • Contents

    Contents i

    List of Figures iv

    List of Tables vi

    1 On Welfare or In Work: Perspective from Single

    Motherhood and Early Childhood Outcomes 1

    1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

    1.2 Policy Background and Literature Review . . . . . . . . . . . . . 5

    1.2.1 Policy Background . . . . . . . . . . . . . . . . . . . . . . 5

    1.2.2 Literature Review . . . . . . . . . . . . . . . . . . . . . . . 8

    1.3 Econometric Method . . . . . . . . . . . . . . . . . . . . . . . . . 11

    1.3.1 Contemporaneous Specification . . . . . . . . . . . . . . . 14

    1.3.2 Cumulative Specification . . . . . . . . . . . . . . . . . . . 14

    1.3.3 Value Added Specification . . . . . . . . . . . . . . . . . . 15

    1.3.4 Cumulative Value Added Specification . . . . . . . . . . . 16

    1.4 Data Source . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

    1.5 Empirical Results . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

    1.5.1 Main Specifications . . . . . . . . . . . . . . . . . . . . . . 20

    1.5.2 Model Selection . . . . . . . . . . . . . . . . . . . . . . . . 23

    1.5.3 Robustness Check . . . . . . . . . . . . . . . . . . . . . . . 24

    1.5.3.1 Alternative Definition of Groups . . . . . . . . . 24

    1.5.3.2 Child Fixed Effects . . . . . . . . . . . . . . . . . 26

    i

  • 1.5.3.3 Mechanism . . . . . . . . . . . . . . . . . . . . . 26

    1.5.3.4 Difference-in-difference Estimations . . . . . . . . 28

    1.6 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

    2 Is the Quantity-quality Trade-off Real? Quasi-

    experimental Evidence from China 54

    2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

    2.2 Institutional Background and Literature Review . . . . . . . . . . 60

    2.2.1 Policy background . . . . . . . . . . . . . . . . . . . . . . 60

    2.2.2 Literature Review . . . . . . . . . . . . . . . . . . . . . . . 60

    2.3 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

    2.3.1 Instrumental Variables . . . . . . . . . . . . . . . . . . . . 64

    2.3.2 Rationale for Using Non-linear Model . . . . . . . . . . . . 66

    2.3.2.1 Graphic Evidence . . . . . . . . . . . . . . . . . . 67

    2.3.2.2 Econometrics Reasoning . . . . . . . . . . . . . . 69

    2.4 Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

    2.5 Empirical Results . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

    2.5.1 At Least One Birth Sample . . . . . . . . . . . . . . . . . 73

    2.5.2 At Least Two Births Sample . . . . . . . . . . . . . . . . . 75

    2.5.3 At Least Three Births Sample . . . . . . . . . . . . . . . . 76

    2.5.4 Robustness Check . . . . . . . . . . . . . . . . . . . . . . . 77

    2.5.4.1 Instruments Validity . . . . . . . . . . . . . . . . 77

    2.5.4.2 Heterogeneous Effects . . . . . . . . . . . . . . . 80

    2.5.4.3 One Child Policy . . . . . . . . . . . . . . . . . . 82

    2.6 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

    3 No Retirement Consumption Puzzlethe Effect of

    Labour Supply on Disaggregated Expenditures in the

    Later Life Cycle 107

    3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

    ii

  • 3.2 Background Information and Literature Review . . . . . . . . . . 112

    3.2.1 Institutional Background . . . . . . . . . . . . . . . . . . . 112

    3.2.2 Literature Review . . . . . . . . . . . . . . . . . . . . . . . 113

    3.3 Empirical Methodology . . . . . . . . . . . . . . . . . . . . . . . . 115

    3.4 Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

    3.5 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

    3.5.1 Empirical Patterns . . . . . . . . . . . . . . . . . . . . . . 121

    3.5.2 Main Results . . . . . . . . . . . . . . . . . . . . . . . . . 122

    3.5.3 Robustness Check . . . . . . . . . . . . . . . . . . . . . . . 124

    3.5.3.1 Bandwidth Choice . . . . . . . . . . . . . . . . . 124

    3.5.3.2 Alternative Specifications . . . . . . . . . . . . . 125

    3.5.3.3 Placebo Test . . . . . . . . . . . . . . . . . . . . 125

    3.5.3.4 Heterogeneity . . . . . . . . . . . . . . . . . . . . 126

    3.5.3.5 Measurement of Expenditure . . . . . . . . . . . 127

    3.5.4 Mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . 128

    3.5.4.1 Family Structure . . . . . . . . . . . . . . . . . . 128

    3.5.4.2 Elderly Support . . . . . . . . . . . . . . . . . . . 129

    3.5.4.3 Intra-household Time Allocation . . . . . . . . . 129

    3.5.4.4 High household saving rate . . . . . . . . . . . . 130

    3.5.4.5 Unexpected Retirement . . . . . . . . . . . . . . 131

    3.6 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132

    References 161

    iii

  • List of Figures

    1.1 Timeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

    1.2 Mothers Working Status by Group . . . . . . . . . . . . . . . . . 50

    1.3 Child Outcome Gap by Group . . . . . . . . . . . . . . . . . . . . 51

    1.4 Robustness Check: Alternative Definition of GroupsMothers

    Working Status by Group . . . . . . . . . . . . . . . . . . . . . . 52

    1.5 Robustness Check: Alternative Definition of GroupsChild Out-

    come Gap by Group . . . . . . . . . . . . . . . . . . . . . . . . . 53

    2.1 First Stage Effects on Fertility . . . . . . . . . . . . . . . . . . . . 101

    2.2 The Mean-variance Relationship for Families with Children . . . . 102

    2.3 Model Fitting in Two Stages 1/2 . . . . . . . . . . . . . . . . . . 103

    2.4 Model Fitting in Two Stages 2/2 . . . . . . . . . . . . . . . . . . 104

    2.5 Model Fitting in One Step 1/22SLS VS. GMM . . . . . . . . . 105

    2.6 Model Fitting in One Step 2/22SLS VS. GMM . . . . . . . . . 106

    3.1 Life Cycle Pattern of Total Non-durable Expenditure . . . . . . . 150

    3.2 First StageThe Effect of Mandatory Retirement Age on Retirement151

    3.3 Balance TestThe Effect of Retirement on Predetermined Variables152

    3.4 Reduced FormThe Effect of Retirement on Main Expenditure

    Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

    3.5 Robustness Check: Quadratic Polynomial Regressions the First

    Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154

    iv

  • 3.6 Robustness Check: Quadratic Polynomial Regressions Balance

    Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155

    3.7 Robustness Check: Quadratic Polynomial Regressions Reduced

    Form Estimation . . . . . . . . . . . . . . . . . . . . . . . . . . . 156

    3.8 Mechanism: Household Composition and Family Transfer . . . . . 157

    3.9 Mechanism: The Fraction of Retirees in the CHNS Sample . . . . 158

    3.10 Mechanism: Food Shopping Time in the CHNS Sample . . . . . . 159

    3.11 Mechanism: Food Preparing Time in the CHNS Sample . . . . . . 160

    v

  • List of Tables

    1.1 Working Family Tax Credit (WFTC) Rule . . . . . . . . . . . . . 32

    1.2 Working Tax Credit and Child Tax Credit (WTC/CTC) Rule . . 33

    1.3 Summary Statistics by Child Age and Group . . . . . . . . . . . . 34

    1.4 Transition Matrix of Working Status across Time . . . . . . . . . 35

    1.5 The Determinates of Working Status Transition . . . . . . . . . . 36

    1.6 The Effect of In-work Benefit Reforms on Childrens Cognitive

    Outcomes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

    1.7 The Effect of In-work Benefit Reforms on Childrens Non-cognitive

    Outcomes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

    1.8 Model SelectionA Cross-Validation Approach . . . . . . . . . . 39

    1.9 Robustness Check: Alternative Definition of GroupsFixing

    groups at the first wave1 . . . . . . . . . . . . . . . . . . . . . . . 40

    1.10 Robustness Check: Alternative Definition of GroupsEducation1 41

    1.11 Robustness Check: Child Fixed Effects Estimation . . . . . . . . . 42

    1.12 Mechanism: Treatment Effect through Childcare Usage and Family

    EnvironmentFirst Control Group . . . . . . . . . . . . . . . . . . 43

    1.13 Mechanism: Treatment Effect through Childcare Usage and Family

    EnvironmentSecond Control Group . . . . . . . . . . . . . . . . 44

    1.14 Mechanism: Treatment Effect through Income Channel . . . . . . 45

    1.15 Mechanism: Treatment Effect through Working Hour Channel . . 46

    1.16 Robustness Check: the Effect of 30 hour Element of the In-work

    Benefit Reforms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

    vi

  • 1.17 Robustness Check: Consistency of WFTC and WTC/CTC reform

    effectsDifference-in-difference Estimations . . . . . . . . . . . . 48

    2.1 Relevant Test: First Childs Gender . . . . . . . . . . . . . . . . . 86

    2.2 First Stage Effects on Fertility . . . . . . . . . . . . . . . . . . . . 87

    2.3 Descriptive Statistics by Sample 1/2 . . . . . . . . . . . . . . . . 88

    2.4 Descriptive Statistics by Sample 2/2 . . . . . . . . . . . . . . . . 89

    2.5 The Effect of Family Size on Education Outcome . . . . . . . . . 90

    2.6 Testing the Internal Validity of Instruments Birth Spacing . .

of 183

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