Compulsory Schooling Laws and Mother's Labor Supply: Testing the Permanent Income Hypothesis

Abstract

This paper examines how mothers adjusted their labor supply in response to compulsory schooling laws enacted across U.S. states between 1852 and 1918. Using IPUMS census samples spanning 1880–1930 and a difference-in-differences design exploiting staggered law adoption, I find that compulsory schooling laws increased mother's labor force participation by 0.62 percentage points ($p=0.009$). Event study analysis confirms parallel pre-trends and reveals an immediate post-treatment effect. Strikingly, Black mothers exhibited a 9-fold larger response (2.82 pp, $p<0.001$) compared to white mothers (0.31 pp, not significant), suggesting that the income shock from child labor restrictions was more binding for Black families. Effects are concentrated among rural, non-farm households, while farm families—often exempt from enforcement—show null effects. These findings provide novel evidence on how historical households adjusted to policy-induced income shocks and reveal substantial racial heterogeneity in economic vulnerability. \medskip JEL Codes: J22, N31, I28, J15 Keywords: Compulsory schooling, labor supply, permanent income hypothesis, child labor, women's work, race