Employment, Motherhood and School Continuation Decisions Of Young White, Black and Hispanic Women

This paper examines the empirical relationship between early employment activity and school continuation decisions for American women ages 16 to 24. We formulate a sequential schooling choice model that guides our exploration of these crucial life-cycle decisions. Our estimation strategy takes into account the endogeneity of young women's schooling, labor supply, and birth decisions by jointly modeling the three outcomes using a dynamic, discrete-choice framework and controlling for unobserved person-specific differences. Results show that a moderate amount of market activity while enrolled in school does not accelerate school withdrawal, but the rate of school leaving increases as work intensity rises. This finding explains the higher school discontinuation rates of Hispanic girls from secondary school and young black women from college because minority women face tighter budget constraints at these ages. These results suggest the disturbing implication that youth employment not only induces long-run loss in wage growth for women whose time allocation during the early life course undermines human capital investment, but also potentially increases race and ethnic inequities