Assessing the causal effect of childbearing on economic wellbeing in Albania

In this paper we analyze to what extent births may lead to changes in economic wellbeing. In contrast to most previous studies on this issue we apply appropriate econometric techniques based on longitudinal micro data in order to identify the causal effects of child bearing events on income. We perform our analysis on longitudinal data from the Albanian Living Standard Measurement Survey. We take a quasi experimental approach, that is, we consider the experience of a childbearing event as the treatment variable, and our measure of wellbeing as the outcome variable. In order to deal with the confounding due to the presence of systematic differences in background characteristics between the treatment groups, we first fit a multiple linear regression model that includes relevant background characteristics as well as an indicator variable for the treatment (i.e., childbearing). This estimation is then compared and contrasted with a matching approach, based on the bias-corrected matching estimator introduced by Abadie and Imbens (2002). Our analysis suggests that there is some evidence that childbearing events can in fact increase household wellbeing in Albania. In addition, the treatment effect is highly heterogeneous with respect to observable characteristics such as the woman's working status and the woman's parity. All the results appear to be robust with respect to the estimated equivalence scale: changing the equivalence scale leaves the childbearing effect on income positive and non-significant. [Working Paper 2006/13, Department of Statistics, University of Florence, Italy]