The social multiplier and labour market participation of mothers

Au-delà d’une simple corrélation, nous montrons qu’il existe une véritable relation de cause à effet entre les décisions d’activité des voisines et la décision individuelle. Cet article est rédigé en anglais.

Abstract :
In France as in the United States, a mother’s decision to participate in the labour market is influenced by the sex composition of her two eldest siblings. Using a large French dataset which sampling units’ consist of small neighbourhoods (i.e., 20 to 30 households), we show that a mother’s decision to participate in the labour market is also affected by the sex composition of the eldest siblings of the other mothers living in the same close neighbourhood. In addition, we find that the effect of own eldest siblings and the effect of neighbours’ eldest siblings have both declined after the reform of family benefits in 1994.
It is when, and only when, the sex composition of a mother’s eldest siblings affects her own behaviour that it also affects the behaviour of her neighbours. Building on these findings, we provide estimate of the causal effect of neighbours’ participation in the labour market on a mother’s participation using the sex composition of close neighbours’ eldest siblings as an instrumental variable. Our estimates suggest a significant elasticity of own labour market participation to neighbours’ participation. We provide additional evidence showing that the random fertility shocks that affect the timing of births and the participation in the labour market of a mother, also affect the participation in the labour market of the other mothers in the neighbourhood.