FERTILITY AND THE FEMALE DECISION TO BE SELF-EMPLOYED – TESTING FOR BIDIRECTIONAL CAUSATION IN PUNJAB, PAKISTAN

Abstract

Numerous studies, mostly from the developed countries, report a positive correlation between the number of children or fertility decisions and the choice of becoming self-employed amongst women. However, the direction of this relationship has remained ambiguous. Contingent upon the direction of causation between children and women self-employment, policies directed towards achieving a certain goal, such as facilitating women in maintaining an appropriate balance between family and work, may have varying ramifications on female self-employment. Using cross-pooled MICS data for the years; 2011 and 2014, this study aims at testing two competing hypotheses; first whether having more children influence women to prefer self-employment? Second, is it employment-specific attributes associated with selfemployed females that impact their decision to reproduce? The paper contributes to the literature by testing for bidirectional causation between female self-employment and children using an instrumental variable approach for bringing exogenous variation in fertility and female self-employment decisions, respectively.