Household Interaction and the Labor Supply of Married Women

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Changing social norms, as reflected in the interactions between spouses, are hypothesized to affect the employment rates of married women. A model is built in order to estimate this effect, in which the employment of married men and women is the outcome of an internal household game. The type of the household game is exogenously determined as either Classical or Modern. In the former type of household, the spouses play a Stackelberg leader game in which the wife's labor supply decision is based on her husband's employment outcome while the latter type of household is characterized by a symmetric and simultaneous game that determines the spouses' joint labor supply as Nash equilibrium. Females in Modern households are predicted to have higher employment rates than women in Classical households if they have narrower labor market opportunities and/or higher relative risk aversion. The household type is exogenously determined when the couple gets married and is treated as unobserved heterogeneity. The model is estimated using the Simulated Moments Method (SMM) and data from the Panel Study of Income Dynamics (PSID) survey for the years 1983-93. The estimated model provides a good fit to the trends in employment rates and wages. We estimate that 38 percent of households are Modern and that the participation rate of women in those households is almost 80 percent, which is about 10 higher than in Classical households. Meanwhile, the employment rate among men is almost identical in the two types of household. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SJEL Classification: E24, J2, J3

Families in Macroeconomics

“…Using a quantitative model, Knowles (2013) argues that an endogenous increase in female bargaining power is important in explaining the rise in female labor supply over the 1970-2000 period without implying a (counterfactual) large decline in male labor supply. Eckstein and Lifshitz (2015) estimate a labor supply model in which couples differ in how bargaining takes place (e.g., cooperative versus non-cooperative bargaining), and find that bargaining has a large impact on female, but not male labor supply.…”

Single Moms and Deadbeat Dads: The Role of Earnings, Marriage Market Conditions, and Preference Heterogeneity

“…First, individuals have preferences over consumption, . Following Eckstein and Lifshitz () and Tartari (), we assume consumption is a public good within marriage but a private good when single. Thus, there are economies of scale within marriage due to joint consumption.…”

“…As in Eckstein and Lifshitz () and Tartari (), we assume married couples pool their resources, consumption is a public good within marriage, and a given fraction of household income is devoted to resident children. We denote ψ the fraction of household income that is allocated to children and let this fraction depend on the number of children in the household, keeping in mind that we assume children born outside of marriage and children from dissolved marriages reside with their mother.…”

“…We denote ψ the fraction of household income that is allocated to children and let this fraction depend on the number of children in the household, keeping in mind that we assume children born outside of marriage and children from dissolved marriages reside with their mother. We use the same values of ψ as Eckstein and Lifshitz () that are based on OECD equivalent scales . Thus, a married individual's consumption is given by Consumption is private when individuals are single.…”

Bucking the Trend: Female Labor Market Participation in Kosovo

“…Namely, while men are typically considered as the main bread-winners, women are responsible for care-taking in the household. In this context, a decision regarding women seeking employment is likely to incorporate the labor market outcome/decision of her husband (and other males in the household), as in the so-called "classical" type of household, as discussed by Eckstein and Lifshitz (2015). Given the high unemployment faced by men and the absence of unemployment benefits in Kosovo, the increased "pressure" on women in households with unemployed men may be a particularly strong factor in determining FLFP.…”