Martha J. Bailey Department of Economics, University of Michigan and National Bureau of Economic...
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THE ECONOMICS OF
"THE PILL"
Martha J. BaileyDepartment of Economics, University of Michigan
and National Bureau of Economic Research
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This Talk
Reflections on the 20th CenturyHow has women’s work and childbearing
changed?Big question: Why has women’s work and
childbearing changed?
Quantify the Role of the Birth Control Pill
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Reflections on the 20th Century
“the Female Century” Economist, September 1999
“the demographic century”
Joseph Chamie, 2003
Director Population Division of the UN
Dept. of Economic & Social Affairs
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The Female Century
1. Big changes in the number of women working for pay
2. Big changes in the age of women participating in the paid labor force
3. Big changes in the proportion of women graduating from college (and majors & occupations they choose)
4. Big changes in women’s pay
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Women’s Labor-Force Participation
0.242
0.657
0.619
0.532
0.446
0.362
0.306
0.2580.248
0.189
0.2060.237
0.237
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
1880 1900 1920 1940 1960 1980 2000
Source: 1890-1940, Goldin (1990: 17); 1940-1960 IPUMS, Ruggles and Sobek (1997) ; 1963-2001 March CPS, Unicon (2001)
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Women’s Labor-Force Participation, Selected Countries, 1960-2000
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.3.4
.5.6
.7.8
20 30 40 50 60Age of cohort
Women’s labor force participation, by birth cohort and age
1920
1930
1940
1950
1960
1955
1900
1970
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Ratio of Median Earnings of Women to Men
Source: Goldin (2006). Plots the median female-male earnings ratio for full-time year round civilian workers.
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The Demographic Century1. Big changes in the number of children
women have
2. Big changes in certainty and timing of childbirth
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General Fertility Rate, United States 1895-1980
Source: Historical Statistics10Demography 275, February 2011
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Distribution of Children Ever Born
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0 1 2 3 4 5 6 7 8 9 10 11 12
1910
1920
1949
1940
1930
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What We Know about Why?
Fundamental changes in women’s work and childbearing outcomes
Harder to say why things changes occurred
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Debate about the Answers Industrial changes increased “demand” for
women in market work○ Clerical work, manufacturing during WWII, demand
for teachers, microcomputer revolution
Home production increased “supply” of women to market work
○ Household: Indoor plumbing, electrification and household appliances
○ Birth regulation: Childbearing becomes deliberate
Institutional changes affected labor supply and demand
○ Changing norms, discrimination, and regulationDemography 275, February 2011 13
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Do the Answers Matter? Empowerment of women
Equity based argumentsExpands the talent pool directlyAssociated with education and health of
children, reductions in poverty, and longer-term economic development
But how to do it?Stimulating certain sectors, regulating labor
marketsSubsidizing home appliances, family
planning
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Quantifying the Importance of “the Pill”
Enovid approved as the first oral contraceptive in 1960 and was “wildly popular”
Isolating its role difficult in the 1960s is difficult
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General Fertility Rate, 1910-1980
Enovid approved for long-term use as contraceptive
Enovid approved for the regulation of menses
1957 1960
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Second Wave Feminism and Cultural Changes
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How Important Was the Pill?
“The ‘contraceptive revolution’ … ushered in by the pill has probably not been a major cause of the sharp drop in fertility in recent decades”
~Gary Becker
“The impact of the Pill is overrated.” ~Gloria Steinem
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How Important Was the Pill?
“There is a straight line between the Pill and the changes in family structure we see now…22% of women earning more than their husbands. In 1970, 70% of women with children under 6 were at home; 30% worked—now that’s roughly reversed.”
~Terry O’Neill,
National Organization for Women
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Two Studies of the Pill
#1 The Pill’s Effect on Marital Fertility (AER, 2010)
#2 The Pill’s Effect on the Careers of Young Women (QJE 2006, 2009 joint with Brad Hershbein and Amalia Miller 2010)
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A Little Economics
max U(Z,N) s.t. pN+Z M
Assumptions:
(1) averting births costless
(2) choice of births occurs with certainty
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Modified Set-Up
Let N=NN – A
where NN : “natural fertility” and A: averted births
max U(Z, NN – A) s.t. p(NN – A) + Z + C(A) M
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Marginal Benefit of Averting Births
Expected Fertility
Expected Births Averted
8
03
5
1
7
0
8
2
6
4
45
3
6
2
7
1
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Adding Marginal Costs
Expected Fertility
Expected Births Averted8
03
5
1
7
0
8
2
6
4
45
3
6
2
7
1
Zero marginal cost of averting births
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Adding Marginal Costs
Expected Fertility
Expected Births Averted8
03
5
1
7
0
8
2
6
4
45
3
6
2
7
1
Positive marginal cost of averting births
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The “Pill” Affects Supply of Births
1. Lowers the marginal cost of averting births
Decreases price of child quality (w.r.t. quantity)
Taken separate from time of intimacy (reduces behavioral costs, psychic costs; eliminates bargaining and coordinating)
2. Reduces uncertainty surrounding terminal number and timing
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Marginal Benefit
Expected Fertility
Expected Births Averted8
03
5
1
7
0
8
2
6
4
45
3
6
2
7
1
Positive marginal cost of averting births
Marginal cost of averting births with the Pill
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#1 The Pill and Marital Fertility
Estelle Griswold
Executive Director of Planned Parenthood League of Connecticut
1873: Federal Comstock Act passed
1960: 33 states had Comstock laws surviving; 25 sales bans; 11 had sales bans without physician exceptions
1965: US. Supreme Court decision Griswold enjoins Connecticut’s statute—states across the nation revised their statutes
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1. Claim: Different language of Comstock laws imply
different marginal costs of using the Pill within year
2. Test of how much Pill matters: Examine how contraceptive use and birth rates
changed in places with sales bans
Empirical Strategy
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Empirical Test
1957FDA approves Enovid
1965 Griswold decision
Comstock Laws enacted
1900
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Laws relatively ineffective preventing sales/use of contraceptives
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Empirical Test
1957FDA approves Enovid
1965 Griswold decision
Comstock Laws enacted
1900
Laws interact with Pill technology :
1. Doctors reluctant to prescribe it/pharmacists to supply illegally
2. Black market unlikely to function
3. Marginal cost falls differentially in states without sales bans
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Empirical Test
1957FDA approves Enovid
1965 Griswold decision
Comstock Laws enacted
19001970
States repeal or revise laws and prices converge
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Ever Used Oral Contraception (Comstock Sales Ban-No Restriction)
-0.1
-0.09
-0.08
-0.07
-0.06
-0.05
-0.04
-0.03
-0.02
-0.01
0
0.01
0.02
Jan-60 Jan-61 Jan-62 Jan-63 Jan-64 Jan-65
NE MW S W
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Changes in Observables? Not really
GeographyAgeRaceReligionEducationIdeal number of children
Regressions that adjust for these differences imply lower use in states with sales bans of 25 %
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Changes in Unobservables?Differences in attitudes or reporting? Differences in 1955 use or attitudes about
contraception? No Differences in 1965 use of other
contraceptives (accounts for reporting)? No Differences in 1970 use of Pill or other
contraceptives (after bans disappear)? No Differences in price due to legal regime
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-10
-5
0
5
10
15
1950 1955 1960 1965 1970 1975 1980
Sales Bans and Birth Rates
≈ 7 births/1000
Relative to states in same census region
1957:FDA approves Enovid
1965: Griswold
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The Big Picture
≈18/30 births=0.60
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#2: The Pill and Young Women’s Careers
1. In 1960, married women had already made their career and family decisions without the Pill
2. How did young women’s decisions about family and career change once they knew they had control of childbearing?
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.3.4
.5.6
.7.8
20 30 40 50 60Age of cohort
Women’s Labor Force Participation, by cohort and age
1920
1930
1940
1950
1960
1955
1900
1970
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Natural Experiment in “Early Legal Access” (ELA) to Pill
Legal age of majority Today: 181960: 21
Changes in the legal age, 1960 to 1976 Within-cohort variation in access to the Pill at
age 18
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“Early legal access”
Random Assignment of ELA
18 21
Treatment groupLegal access to Pill at age 18 or marriage
Comparison group
Legal access to Pill at age 21
Age
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Empirical Strategy
a: ages broken into 5-year groups, g.
s: state of residence at age 21
c: birth cohorts 1943-1953
OLS for continuous DVs
Probits for binary DVs (APEs reported)
Fixed effects for state, cohort, age group
Standard errors clustered at state-level
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ELA
Women’s decisions:1. Marriage timing
and first birth timing
2. Expectations about work
3. Investments in career
4. Wages
Subsequent “treatments” like abortion
Baseline characteristics
cov(ELA,)0
cov(ELA,)0
cov(ELA,Pill|Z)>0
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Testing Identifying Assumptions
Valid strategy? Is ELA correlated with the error?
○ Baseline assignment not conditionally random?
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Random Assignment?
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Women’s Career Investments
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Women’s Work for Pay
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Women’s Lifetime Earnings
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Quantitative Conclusions
Innovations in birth control sped change in the post-1960 periodTiming of changes in work and childbearing
relate closely to the diffusion of the PillEvidence from “natural experiments” shows
that the Pill reduced childbearing and boosted young women’s career investment
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Broader Conclusions
Welfare effects Economic empowerment of women Panacea? Effects on children?
But, the Pill was not the only thing The “demand” curve Pill was a tool that allowed women to
capitalize on the growing opportunities One part of the larger story of the 20th
century
50Demography 275, February 2011