Out of Labor and Into the Labor Force? The Role of Abortion Access, Social Stigma, and Financial Constraints

This paper studies the effects of abortion access on fertility and women’s career outcomes. To establish causality, we leverage a policy change that in 2014 increased the eligibility age cutoff for free abortion in Israel. We use newly constructed administrative data that allows us to track abortions, births, employment, earnings, and formal education for the universe of Israeli women over a seven-year period. We show that access to free abortion increases the abortion rate but does not increase conceptions. Instead, the result is driven by more abortions among poor women who live in religious communities in which abortion is socially stigmatized. This finding suggests that when abortion is free, poor women do not need to consult family members for financial support, which allows them to have an abortion in private. In the medium-run, access to free abortion delays parenthood, increases human capital investment, and shifts employment towards the white-collar sector, suggesting a large career opportunity cost of unplanned parenthood. Finally, by using observable information on the women we suggest alternative policies that improve targeting of financially constrained women.