A Structural Approach to Assessing Retention Policies in Public Schools

Abstract

Abstract One out of five entering public school teachers leave the field within the first 4 years. Despite that the presence of a newborn child is the single most important determinant of exits of female teachers, retention policy recommendations rely on models that take children as predetermined. This article formulates and estimates a structural dynamic model that explicitly addresses the interdependence between fertility and labor force participation choices. The model with unobserved heterogeneity in preferences for children fits the data and produces reasonable forecasts of labor force attachment to the teaching sector. Structural estimates of the model are used to predict the effects that wage increases and reductions in the cost of childcare would have on female teachers’ employment and fertility choices. The estimates unpack important features of the interdependence of fertility and labor supply and contradict previous studies that did not consider the endogeneity between these two choices.