Women’s labor supply - motherhood and work schedule flexibility

This paper analyzes the degree to which flextime reduces fertility-related career interruptions. In particular, I ask whether women with flextime return to work sooner and remain employed when they have young children. I quantify the resulting reduction in the earnings penalty from periods of non-employment due to child-care responsibilities. To answer this question, I develop a structural dynamic discrete choice model for the fertility and labor supply decisions of married and cohabiting women. The model allows flextime to directly affect preferences, the arrival rate of job offers and offered wages. I estimate the model using a sample drawn from the National Longitudinal Survey of Youth 1979. Preliminary estimates reveal a sizeable willingness to pay for flextime in a full-time job of between 11-45% of full-time earnings. A woman values flextime more strongly as her number of children increases or if she has an infant. If flextime were available to all women with infant children, on average fertility would increase by 0.2 children. Full-time work experience would increase by up to one year and as a result, potential wages at age 35 would increase by 1%. Realized earnings between marriage and age 35 would increase by up to 5% and welfare would increase by up to 8%.