The Effect of Fertility on Women's Labor Force Participation in Indonesia
Abstract
Although previous studies have documented an association between fertility and women’s labor force participation in Indonesia, limited evidence has addressed fertility endogeneity in identifying its causal effect on women’s employment. This study contributes by applying an Instrumental Variables (IV) strategy using age at first marriage as an instrument for fertility. Using cross-sectional data from the 2022 National Socioeconomic Survey (SUSENAS) covering women aged 15–49 years, the study employs a Linear Probability Model estimated through Two-Stage Least Squares (2SLS), with education and household size as control variables. The first-stage results confirm that age at first marriage is significantly associated with fertility and satisfies the instrument relevance criterion, while the endogeneity test indicates that fertility is endogenous. The second-stage results show that fertility has a negative and statistically significant effect on women’s probability of working. An additional child is associated with an approximately 48.2 percentage-point reduction in the probability of working, ceteris paribus. Education and household size have positive effects. These findings provide evidence of a causal relationship under the IV assumptions and contribute to the literature on fertility and women’s labor market participation in Indonesia.
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