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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:[email protected]://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 . .