Hyojung Koo

Job Market Candidate

Job market paper:

A Structural Model of Fertility and Work Decisions of Married Women: Self Employment as the Third Option

This paper estimates a dynamic model of fertility, labor supply, and self employment decisions of married women over life time using the NLSY79 women, 1979-1995. It distinguishes four discretized work hour choices of self employment representing alternative choices of part and full time wage work choices. Introducing care costs of preschool children into the model makes it possible to explain the behavior of part timers, especially the higher fertility in self employment. Flexible work hours as well as lower care costs are motivations for self employment around births despite lower hourly earnings and lower payoff to the experience compared to the wage work. However, those incentives do not last long as children grow up and in most cases self employment is only temporary and volatile. A policy subsidizing preschool children¡¯s care costs increases durations of female employment and their life time earnings