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  Labor Supply of Women and Empirical Studies

Labor Supply of Women:

Stylized facts about the female labour power in a number of countries:

A) Substantial dissimilarity across countries in the women’s labor force participation rates.

⇒ Differences in cultural factors, socio-economic status, institutional framework, etc.

B) Common tendency is increasing female labour force participation during past decades.

⇒ Rise in market wage/ decline in Fertility, reservation wage, Time-saving technological advance in household production, Cultural/ legal attitude toward women, Economic and social disruptions from two world wars and GD.

Role of changes in the wage rate as a major determinant of the increase in female labour force participation. As wage increases nonworking women have an incentive to reduce the time they allocate to the household sector and are more likely to enter the labor force.

Empirical Studies:

A) Most studies discover that a positive relationship between a woman’s hours of work and her wage rate (substitution effect dominates).

B) Recent studies, which control for selection bias arising from estimating labor supply models in the nonrandom sample of working women, however, tend to indicate that the size of the female labor supply elasticity may not be very large, perhaps on the order of 0.2.

C) Labor force participation rates as well as hours of work of married women respond to changes in the husband’s wage or income.

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