(Why) Do self-employed parents have more children?
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Using data from the U.S. Census, we find that married self-employed men have between 0.1 and 0.2 more children as compared to if they are not self-employed. This is consistent with the hypothesis that self-employed households have a preference for larger families to raise the likelihood that an inside family member will be a good match at running the business. This empirical relationship is established using a regression framework, including the use of instrumental variables estimation to allow for the possibility of endogeneity of the respondent’s self-employment status and whether the respondent’s spouse stays at home. Moreover, we find a slightly higher demand for sons among the self employed who are over 40 at the time of the 1990 U.S. Census: namely, given the exogenous variation in gender mix of prior children, self employed parents born prior to 1950 appear to have an increased demand for a third child if the first two children were not sons. This effect does disappear, however, for the later generation of respondents.
KeywordsSelf-employment Children Family business
JEL ClassificationD10 D13
We thank Bryan Engelhardt for excellent research assistance, and the Reed Institute for Decision Sciences at Claremont McKenna College for Broussard’s funding. We also thank Heather Antecol, Kelly Bedard, Martin Browning, Pierre-Andre Chiappori, Gordon Dahl, Eric Helland, Joshua Rosett, Kwanho Shin and seminar participants at Claremont McKenna College, Korea University, the University of California, San Diego and the University of Copenhagen and for their comments. The opinions expressed are those of the authors and do not necessarily reflect views of the IMF.
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