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
Demography 275, February 2011 3
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
Demography 275, February 2011 4
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
6Demography 275, February 2011
.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
7Demography 275, February 2011
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.
8Demography 275, February 2011
The Demographic Century1. Big changes in the number of children
women have
2. Big changes in certainty and timing of childbirth
Demography 275, February 2011 9
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
11Demography 275, February 2011
What We Know about Why?
Fundamental changes in women’s work and childbearing outcomes
Harder to say why things changes occurred
Demography 275, February 2011 12
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
Demography 275, February 2011 14
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
Demography 275, February 2011 15
General Fertility Rate, 1910-1980
Enovid approved for long-term use as contraceptive
Enovid approved for the regulation of menses
1957 1960
16Demography 275, February 2011
Second Wave Feminism and Cultural Changes
Demography 275, February 2011 17
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
18Demography 275, February 2011
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
Demography 275, February 2011 19
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)
Demography 275, February 2011 20
A Little Economics
max U(Z,N) s.t. pN+Z M
Assumptions:
(1) averting births costless
(2) choice of births occurs with certainty
21Demography 275, February 2011
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
22Demography 275, February 2011
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
23Demography 275, February 2011
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
24Demography 275, February 2011
Adding Marginal Costs
Expected Fertility
Expected Births Averted8
03
5
1
7
0
8
2
6
4
45
3
6
2
7
1
Positive marginal cost of averting births
25Demography 275, February 2011
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
26Demography 275, February 2011
Marginal Benefit
Expected Fertility
Expected Births Averted8
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
27Demography 275, February 2011
#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
28Demography 275, February 2011
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
29Demography 275, February 2011
Empirical Test
1957FDA approves Enovid
1965 Griswold decision
Comstock Laws enacted
1900
30Demography 275, February 2011
Laws relatively ineffective preventing sales/use of contraceptives
Empirical Test
1957FDA approves Enovid
1965 Griswold decision
Comstock Laws enacted
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
31Demography 275, February 2011
Empirical Test
1957FDA approves Enovid
1965 Griswold decision
Comstock Laws enacted
19001970
States repeal or revise laws and prices converge
32Demography 275, February 2011
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
33Demography 275, February 2011
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 %
Demography 275, February 2011 34
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
Demography 275, February 2011 35
-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
36Demography 275, February 2011
The Big Picture
≈18/30 births=0.60
37Demography 275, February 2011
#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?
38Demography 275, February 2011
.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
39Demography 275, February 2011
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
40Demography 275, February 2011
“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
41Demography 275, February 2011
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?
Demography 275, February 2011 45
Women’s Career Investments
Demography 275, February 2011 46
Women’s Work for Pay
Demography 275, February 2011 47
Women’s Lifetime Earnings
Demography 275, February 2011 48
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
Demography 275, February 2011 49
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
50Demography 275, February 2011