Self-selection in decision-making of pregnancy resolutions, demand for prenatal care and birth outcome production function

This dissertation investigates self-selection effects on decision-making for pregnancy resolutions, demand for prenatal care and fetal health production. Three major hypotheses are tested. (A) Women make sequential decisions concerning a pregnancy: the first decision is to select between giving birth or obtaining an abortion; the second decision is to determine an optimal demand for health inputs. (B) The nature of the sequential decision-making suggests that it is quite unlikely that women giving birth, as a censored sample, would be a random sample drawn from the entire population of pregnant women. (C) The self-selection effect may also exist with the heterogeneity of health endowment and the endogeneity of prenatal care in producing fetal health. Consequently, failure to take into account these self-selection effects may considerably bias the estimates of demand for health inputs and fetal health technology.;To rationalize the mechanism of self-selection in pregnancy resolutions, a random utility differential function is introduced. The information of sample selection in pregnancy resolutions is incorporated into a model of demand for prenatal care and fetal health production controlling for the birth selection effect. The model also corrects for selection bias due to heterogeneity of health endowment and endogeneity of health inputs demand. Finally, an empirical investigation is conducted for both models with and without the correction of self-selection effects.;The major findings are as follows. (A) The self-selection effect in pregnancy resolutions introduces an upward bias to the true marginal product of prenatal care for fetal health technology; a race-specific self-selection bias is found in the demand for prenatal care. (B) The adverse selection effect in input use appears to dominate the favorable selection effect. Therefore, a downward bias would have occurred to the marginal product of prenatal care if no action was taken to control for endogeneity of prenatal care. (C) Unobservables involved with the pregnancy resolutions are inversely correlated with those in the demand for prenatal care and health production functions. This suggests that the shadow price of abortion tends to dominate the other unobservables in the system.