More power to the pill: contraceptive freedom and labor participation

Figure 1: Live First-Birth Rates by Age of Mothers

The 1960s were revolutionary times. As Bob Dylan - one of my favorite musicians and probably one of the most famous characters of that time - said, "there is nothing so stable as change". This was certainly true in the US at the time: The Civil Rights Movements, social unrest due to the Vietnam War, the invention of the microchip, antidiscrimination legislation, the women's movement. And the invention of Enovid, the first contraceptive pill. Yes, you read right. The contraceptive pill was a revolutionary element. And as such, it has also been studied by an economist (and by the way published in the Quarterly Journal of Economics, among the top 3 economics journals). Martha Bailey evaluated the effect the release of this little pill in 1960 had on female labor participation. Gary Becker had previously said that "the contraceptive revolution [...] has probably not been a major cause of the sharp drop in fertility". However, Bailey will show that even if fertility did not decrease because of the pill, it did delay it, allowing women to get more education and improve their labor outcomes.

Figure 1 shows trends in first-birth rates by age groups since 1940. A marked decline in childbearing among young women (focus on 20-24 years old) is seen since the pill was introduced. This lasted until 1976 when all unmarried minors were allowed obtain contraceptives under the law. Early access allowed women between 18 and 21 to get access to the pill and hence the largest decline is seen for those 18-19 years old. A first robustness check can be seen from those 15-17 years old. Since they are expected to be too young to benefit from the pill, we should and do observe no effect for them. This gives us confidence we are not just seeing a spurious result.

As the diffusion of the pill increases, the distribution of age at first-birth also changes. Figure 2 plots the fraction of women first giving birth by age groups and cohorts. Among women born before the 1940 who were too old to benefit from early access to the pill, around 62% report having children before age 22. For those born around 1955, this had dropped by 25%. Notice that both figures suggest that these effects were not due to preexisting trends. Also no changes are seen between 1955 and 1960, when all women would have already had access to the pill.

Figure 2: Distribution of Age at First-Birth, by Cohorts.

And where does the economics come in? Early access to the pill was reflected in female labor force participation. Before 1940 the increase in women's participation had been driven by married women over 30 years old, who returned after their children had grown. On the other hand, for those born in 1955 the "fertility dip" is not observed any more. Participation rates were 25% higher at age 25.

Figure 3: Labor Force Participation, by Age and Cohort.

But how can we disentangle the effect of the pill from all the other things going on the 1960s that I mentioned above? Here is were econometric tools come in. The expansion of the pill was different across states, which individually changed the legal rights of individuals ages 18 to 21. Indirectly, this effect empowered women to get early access to the pill, without parental consent.* This exogenous variation will allow Bailey to compare the effect of the pill on women's life cycle labor force participation. Just to fix ideas, the methodology is like taking two states that were previously equal. But one state decides to extend legal rights to younger individuals and the other does not. Consequently, only one state allows young women to get access to the pill. Then, the difference in the labor force participation of the women between the two states will be coming from the pill. More than two states and more controls are used to obtain the results, but the intuition of the technique is in the previous simple example.

A first thing to check is whether early access to the pill had an effect on fertility. Table 1 shows the baseline estimate (column 2) is that it reduced the probability of giving birth by age 22 by 14%. Interestingly, early access to abortion does not seem to drive the results (column 3). As expected, it did not reduce the number of children before 19, since women did not have legal access to the pill without parent consent before that age. Finally, as other people had reported, the pill did not reduce the number of children women had, suggesting it just delayed it.

Table 1: The effect of early legal access to the pill on fertility.

What effect did this have on labor outcomes? Bailey shows that early access to the pill increased labor force participation of women ages 26-30 by 7%, and also increased those of ages 31-35. They also seem to work more hours, hence getting closer to male labor outcome averages. For women under 25 years old, results suggest that the pill increased their enrollment in school. Changing career trajectories - resulting from delay in childbearing - was the primary mechanism this little pill increased female labor-force participation. 

* Bailey goes into some detail to justify that this extension of rights was not related to states characteristics that could be directly related to the variables of interest. Most of the changes are suggested to have to do with discrepancy under federal law of being old enough to be drafted to the Vietnam war by age 18, but not being able to vote. At the state-level, legislation was extending rights to 18 year old men and women.