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Working Paper Number SIPP-WP-259
Peter Gottschalk and Martha Stinson
Component ID: #ti1648872404

This report is released to inform interested parties of ongoing research and to encourage discussion of work in progress. Any views expressed on statistical, methodological, technical, or operational issues are those of the authors and not necessarily those of the U.S. Census Bureau. All data used in this paper are con…dential. The U.S. Census Bureau supports external researchers’ use of some of these data through the Research Data Center network (www.census.gov/ces). For public-use data please visit www.sipp.census.gov/sipp/ and click “Access SIPP Synthetic Data.”

Component ID: #ti1510724996

Abstract

We investigate the question of whether investing in a child’s development by having a parent stay at home when the child is very young (less than 6) has a causal impact on the child’s adult outcomes. Speci…cally, do children with stay-at-home mothers have higher adult earnings or more labor force experience by a given age? Previous attempts to answer this question have been severely limited by the need to observe the child’s outcome starting some 30 years after the initial investment. We overcome this data limitation by using administrative data that provides the complete earnings histories of parents and their children between 1951 and 2011. These long histories allow us to differentiate between different types of mothers and come closer to a causal impact of the mother’s work history when the child is young. We show that when the endogeneity of the mother’s history is ignored, we get the same result as many previous studies: the children of working mothers have lower salaries. However, when we control for endogeneity by using either the sibling estimator or an estimate of mother unobserved earnings heterogeneity, we …find few signi…cant differences between the adult earnings of children with stay-at-home mothers and those with working mothers. We do however see a signi…cant positive effect of working on child labor force experience for families with low educated parents.

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