Reconsidering the impact of family size on labour supply : The twin - problems of the twin - birth instrument

[This version: January 16, 2015] Abstract We consider two econometric problems when investigating the impact of family size on labor market outcomes using the popular twin-birth instrument. The first is the potential for omitted variable bias caused by the fact that fertility treatments are linked to twin births and are typically unobserved. We present estimates corrected for this bias and find it to be comparatively small. Second, we show that the effects of twin-birth induced variation in family size as well as characteristics of the compliers vary substantially with time passed since birth, which has consequences for the interpretation of estimates across samples and time.