Fertility and its Consequence on Family Labour Supply

While a large body of literature focuses on how fertility affects female labour market participation, there are relatively few studies that examine the effect of fertility on male labour market participation. Even if the burden of child care falls mainly on women, an exogenous increase in fertility is likely to change the optimal allocation of time, therefore, the labour supply decision of both female and male in a household. This paper analyses how an exogenous increase in fertility affects labour market participation of men and women in Indonesia - a country that has seen dramatic changes in the labour market over recent decades. The finding is that women do not change their working hours in response to the higher fecundity in both rural and urban areas in Indonesia. On the other hand, the higher fecundity leads to men’s increasing their working hours only in rural areas. These results suggest that men’s labour is a part of the intrahousehold allocation of time and provides evidence against the usual assumption that a husband’s income is exogenous with respect to a wife’s labour supply or the choice of childbearing even in the context of developing countries.