Association for Public Policy Analysis & Management

Expanding legal access to abortion allows women to choose when and under what circumstances to have children, resulting in fewer unwanted births. This control over re-productive choices may have a profound impact on career investment and participation in the labor market. Identifying the causal impact of abortion access on women’s labor market outcomes has historically been difficult due to a lack of detailed micro-data that links pregnancy and economic outcomes and the presence of other policies that simultaneously affect fertility decisions, confounding assessments of abortion access.

We turn to the Israeli context to overcome both of these challenges. We utilize a unique administrative dataset linking employment, earnings, education, births, and abortions for all women in Israel between 2002-2015. A 2014 policy that reduced the monetary cost of abortions to zero for women below the age of 33 serves as a natural experiment. We estimate the first stage effect of the policy of abortion and pregnancy rates using a difference-in- difference approach. Then we estimate the labor market effects using two-stage least squares estimation. We find a 1.8-3.6% increase in the abortion rate in response to the 2014 policy and a subsequent increase in female labor force participation. The effect is strongest among unmarried women, lower earning women and immigrants from the former USSR, who spend an additional 5-9 months in the labor force.