Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/302660 
Year of Publication: 
2024
Series/Report no.: 
IZA Discussion Papers No. 17143
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We present a dynamic life-cycle model of women's labor supply, marriage, and fertility choices that explicitly incorporates mental and physical health. Correlated mental and physical health production functions are simultaneously estimated, including the endogenous decisions to seek psychotherapy and smoke cigarettes as health accumulation factors. The model is estimated by the Simulated Method of Moments with Indirect Inference using data from the British Household Panel Study. Results indicate that mental health has a stronger impact on labor supply than physical health. At the same time, estimates show that working part-time and full-time aect both mental and physical health. Moreover, we nd dierences in the interaction of the two forms of health on other life dynamics, with better mental health having stronger impacts on marriage and fertility outcomes than physical health. Counterfactual simulations reveal that not only permanent, but also temporary shocks to health and employment have long-lasting eects on life decisions, life satisfaction, and income due to their interaction with fertility. Finally, policy experiments show that lower costs for psychotherapy and increased costs of cigarettes would substantially increase fertility but decrease employment, while a decrease in childcare costs for employed women would increase both fertility and labor supply, supporting women's overall health.
Subjects: 
female labor supply
marriage
fertility
career
family
mental health
physical health
psychotherapy
smoking
discrete choice dynamic programming models
structural estimation
simulated method of moments
indirect inference
JEL: 
I12
J12
J13
J16
J22
Document Type: 
Working Paper

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