Martha J. Bailey Department of Economics, University of Michigan and National Bureau of Economic...

THE ECONOMICS OF

"THE PILL"

Martha J. BaileyDepartment of Economics, University of Michigan

and National Bureau of Economic Research

This Talk

Reflections on the 20th CenturyHow has women’s work and childbearing

changed?Big question: Why has women’s work and

childbearing changed?

Quantify the Role of the Birth Control Pill

Demography 275, February 2011 2

Reflections on the 20th Century

“the Female Century” Economist, September 1999

“the demographic century”

Joseph Chamie, 2003

Director Population Division of the UN

Dept. of Economic & Social Affairs


The Female Century

1. Big changes in the number of women working for pay

2. Big changes in the age of women participating in the paid labor force

3. Big changes in the proportion of women graduating from college (and majors & occupations they choose)

4. Big changes in women’s pay


Women’s Labor-Force Participation

0.242

0.657

0.619

0.532

0.446

0.362

0.306

0.2580.248

0.189

0.2060.237

0.237

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

1880 1900 1920 1940 1960 1980 2000

Source: 1890-1940, Goldin (1990: 17); 1940-1960 IPUMS, Ruggles and Sobek (1997) ; 1963-2001 March CPS, Unicon (2001)

5Demography 275, February 2011

Women’s Labor-Force Participation, Selected Countries, 1960-2000


.3.4

.5.6

.7.8

20 30 40 50 60Age of cohort

Women’s labor force participation, by birth cohort and age

1920

1930

1940

1950

1960

1955

1900

1970


Ratio of Median Earnings of Women to Men

Source: Goldin (2006). Plots the median female-male earnings ratio for full-time year round civilian workers.


The Demographic Century1. Big changes in the number of children

women have

2. Big changes in certainty and timing of childbirth


General Fertility Rate, United States 1895-1980

Source: Historical Statistics10Demography 275, February 2011

Distribution of Children Ever Born

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0 1 2 3 4 5 6 7 8 9 10 11 12

1910

1920

1949

1940

1930


What We Know about Why?

Fundamental changes in women’s work and childbearing outcomes

Harder to say why things changes occurred


Debate about the Answers Industrial changes increased “demand” for

women in market work○ Clerical work, manufacturing during WWII, demand

for teachers, microcomputer revolution

Home production increased “supply” of women to market work

○ Household: Indoor plumbing, electrification and household appliances

○ Birth regulation: Childbearing becomes deliberate

Institutional changes affected labor supply and demand

○ Changing norms, discrimination, and regulationDemography 275, February 2011 13

Do the Answers Matter? Empowerment of women

Equity based argumentsExpands the talent pool directlyAssociated with education and health of

children, reductions in poverty, and longer-term economic development

But how to do it?Stimulating certain sectors, regulating labor

marketsSubsidizing home appliances, family

planning


Quantifying the Importance of “the Pill”

Enovid approved as the first oral contraceptive in 1960 and was “wildly popular”

Isolating its role difficult in the 1960s is difficult


General Fertility Rate, 1910-1980

Enovid approved for long-term use as contraceptive

Enovid approved for the regulation of menses

1957 1960


Second Wave Feminism and Cultural Changes


How Important Was the Pill?

“The ‘contraceptive revolution’ … ushered in by the pill has probably not been a major cause of the sharp drop in fertility in recent decades”

~Gary Becker

“The impact of the Pill is overrated.” ~Gloria Steinem


How Important Was the Pill?

“There is a straight line between the Pill and the changes in family structure we see now…22% of women earning more than their husbands. In 1970, 70% of women with children under 6 were at home; 30% worked—now that’s roughly reversed.”

~Terry O’Neill,

National Organization for Women


Two Studies of the Pill

#1 The Pill’s Effect on Marital Fertility (AER, 2010)

#2 The Pill’s Effect on the Careers of Young Women (QJE 2006, 2009 joint with Brad Hershbein and Amalia Miller 2010)


A Little Economics

max U(Z,N) s.t. pN+Z M

Assumptions:

(1) averting births costless

(2) choice of births occurs with certainty


Modified Set-Up

Let N=NN – A

where NN : “natural fertility” and A: averted births

max U(Z, NN – A) s.t. p(NN – A) + Z + C(A) M


Marginal Benefit of Averting Births

Expected Fertility

Expected Births Averted

8

03

5

1

7

0

8

2

6

4

45

3

6

2

7

1


Adding Marginal Costs

Expected Fertility

Expected Births Averted8

03

5

1

7

0

8

2

6

4

45

3

6

2

7

1

Zero marginal cost of averting births


Adding Marginal Costs

Expected Fertility


03

5

1

7

0

8

2

6

4

45

3

6

2

7

1

Positive marginal cost of averting births


The “Pill” Affects Supply of Births

1. Lowers the marginal cost of averting births

Decreases price of child quality (w.r.t. quantity)

Taken separate from time of intimacy (reduces behavioral costs, psychic costs; eliminates bargaining and coordinating)

2. Reduces uncertainty surrounding terminal number and timing


Marginal Benefit

Expected Fertility


03

5

1

7

0

8

2

6

4

45

3

6

2

7

1

Positive marginal cost of averting births

Marginal cost of averting births with the Pill


#1 The Pill and Marital Fertility

Estelle Griswold

Executive Director of Planned Parenthood League of Connecticut

1873: Federal Comstock Act passed

1960: 33 states had Comstock laws surviving; 25 sales bans; 11 had sales bans without physician exceptions

1965: US. Supreme Court decision Griswold enjoins Connecticut’s statute—states across the nation revised their statutes


1. Claim: Different language of Comstock laws imply

different marginal costs of using the Pill within year

2. Test of how much Pill matters: Examine how contraceptive use and birth rates

changed in places with sales bans

Empirical Strategy


Empirical Test

1957FDA approves Enovid

1965 Griswold decision

Comstock Laws enacted

1900


Laws relatively ineffective preventing sales/use of contraceptives

Empirical Test




1900

Laws interact with Pill technology :

1. Doctors reluctant to prescribe it/pharmacists to supply illegally

2. Black market unlikely to function

3. Marginal cost falls differentially in states without sales bans


Empirical Test




19001970

States repeal or revise laws and prices converge


Ever Used Oral Contraception (Comstock Sales Ban-No Restriction)

-0.1

-0.09

-0.08

-0.07

-0.06

-0.05

-0.04

-0.03

-0.02

-0.01

0

0.01

0.02

Jan-60 Jan-61 Jan-62 Jan-63 Jan-64 Jan-65

NE MW S W


Changes in Observables? Not really

GeographyAgeRaceReligionEducationIdeal number of children

Regressions that adjust for these differences imply lower use in states with sales bans of 25 %


Changes in Unobservables?Differences in attitudes or reporting? Differences in 1955 use or attitudes about

contraception? No Differences in 1965 use of other

contraceptives (accounts for reporting)? No Differences in 1970 use of Pill or other

contraceptives (after bans disappear)? No Differences in price due to legal regime


-10

-5

0

5

10

15

1950 1955 1960 1965 1970 1975 1980

Sales Bans and Birth Rates

≈ 7 births/1000

Relative to states in same census region

1957:FDA approves Enovid

1965: Griswold


The Big Picture

≈18/30 births=0.60


#2: The Pill and Young Women’s Careers

1. In 1960, married women had already made their career and family decisions without the Pill

2. How did young women’s decisions about family and career change once they knew they had control of childbearing?


.3.4

.5.6

.7.8

20 30 40 50 60Age of cohort

Women’s Labor Force Participation, by cohort and age

1920

1930

1940

1950

1960

1955

1900

1970


Natural Experiment in “Early Legal Access” (ELA) to Pill

Legal age of majority Today: 181960: 21

Changes in the legal age, 1960 to 1976 Within-cohort variation in access to the Pill at

age 18


“Early legal access”

Random Assignment of ELA

18 21

Treatment groupLegal access to Pill at age 18 or marriage

Comparison group

Legal access to Pill at age 21

Age


Empirical Strategy

a: ages broken into 5-year groups, g.

s: state of residence at age 21

c: birth cohorts 1943-1953

OLS for continuous DVs

Probits for binary DVs (APEs reported)

Fixed effects for state, cohort, age group

Standard errors clustered at state-level

ELA

Women’s decisions:1. Marriage timing

and first birth timing

2. Expectations about work

3. Investments in career

4. Wages

Subsequent “treatments” like abortion

Baseline characteristics

cov(ELA,)0

cov(ELA,)0

cov(ELA,Pill|Z)>0

Testing Identifying Assumptions

Valid strategy? Is ELA correlated with the error?

○ Baseline assignment not conditionally random?

Random Assignment?


Women’s Career Investments


Women’s Work for Pay


Women’s Lifetime Earnings


Quantitative Conclusions

Innovations in birth control sped change in the post-1960 periodTiming of changes in work and childbearing

relate closely to the diffusion of the PillEvidence from “natural experiments” shows

that the Pill reduced childbearing and boosted young women’s career investment


Broader Conclusions

Welfare effects Economic empowerment of women Panacea? Effects on children?

But, the Pill was not the only thing The “demand” curve Pill was a tool that allowed women to

capitalize on the growing opportunities One part of the larger story of the 20th

century


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Martha J. Bailey Department of Economics, University of Michigan and National Bureau of Economic...

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