Increased labor force participation has been an indisputable goal of developed economies. The main arguments have been that increased labor force participation promotes economic growth and reduces poverty. Surprisingly, despite the emphasis on increased l abor force participation as a policy goal, the labor literature does not provide a complete understanding of the full welfare implications of labor force participation. In particular, the fact that labor force participation often takes place in a social c ontext has received little attention.
In the proposed research we will empirically investigate effects of labor force participation on spouses, children and peers. First, we will explore how parents' labor force participation affects children in terms of educational and health outcomes. Second, we will explore the causal effect of labor force participation on marriage and fertility. Finally, we will investigate whether an individual's labor force participation influences his or her peers' participatio n.
Identifying a causal relationship between a person's labor force participation and outcomes of family members and peers is complicated by omitted variable bias. For example, intelligent mothers may be more likely to work, and their children's educat ional performance could reflect genetically inherited abilities rather than their mother's labor force participation. We plan to overcome omitted variable bias by utilizing various child care and labor market reforms, in addition to plant downsizing event s, as "natural experiments".
Investigating the effects of labor force participation on family members and peers is also complicated by data availability. The task requires data on an individual's labor force participation, linked to relevant outcomes for the individual's children, spouse and peers. We will utilize three Norwegian databases that provide a unique opportunity to investigate indirect effects of labor force participation.