for having sons combined with the siblings sex-composition instrument as an exogenous source of variation in the fertility choice. Thus, the analysis focuses on a specific margin: I estimate the impact of having a third child or higher order on parental labor supply outcomes in comparison to those with only two children.

The data used in this paper come from four different surveys conducted in Albania between 2002 and 2012. More specifically, I use the 2002, 2005 and 2012 Albanian Living Standard Measurement Surveys (LSMS) and the 2008-09 Albanian Demographic Health Survey (DHS). The advantage of these surveys is that they contain not only rich information on individuals’ socioeconomic and demographic characteristics, but they also contain detailed information on the family structure of each one of the households, including information about the children no longer living in the household, which makes possible the construction of the entire parental fertility history. For the purpose of this analysis, I construct a repeated-cross section of married mothers and fathers with two or more children whose oldest child is younger than 18 years old.

The main results of this paper argue that an increase in family size has a _positive_ impact on parental labor-force participation in the context of Albania. More precisely, for the sample of mothers I find that having an additional child (third or higher order) increases on average a mother’s likelihood of _working off-farm_ by 5 percentage points and it also increases the working time by around 4.4 _hours per week_ on average. Similarly relevant is the finding that fathers also change positively their labor-market behavior in response to a change in family size. In particular, having an additional child increases fathers’ likelihood of _working off-farm_ by 6.7 percentage points, and also their likelihood of having a _second occupation_ by 4 percentage points.

The second focus of the paper is to pinpoint the channels through which these results operate. I propose two plausible mechanisms behind the positive effect of fertility on parental labor supply for the case of Albania. First, family structure in developing countries, especially in rural areas, is characterized by the presence of extended families where several generations co-reside in or near the same household (Rosenzweig and Wolpin, 1985). In response to an increase in fertility, grandparents may adjust their time allocation by supplying more time in childcare and household chores. Being freed from such tasks reduces the reservation wage for the parents, leading to an increase in labor supply. Thus, for extended families the effect of fertility on parental labor supply depends on the substitutability between grandparent’s time and parent’s time in caring for children.<sup>3</sup> Second, children do not only require costs in terms of time dedicated to them but as well in terms of direct costs such as food, clothing, education or health. Given that a large part of the household budget in developing countries is used to cover basic necessities, such as food and shelter, an increase in financial costs might induce a negative income effect that is

> 3Several studies have examined the effect of family structure on women’s labor supply. They find that coresidence seems to increase the labor supply of women who have children (e.g. Wong and Levine, 1992; Sasaki, 2002; Gong and Van Soest, 2002; Maurer-Fazio et al., 2011; Compton and Pollak, 2014; Garcia-Moran and Kuehn, 2017; Posadas and Vidal-Fern ́andez, 2013; Shen, Yan and Zeng, 2016; Landman, Seitz and Steiner, 2017).

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