Working Paper: CEPR ID: DP3201
Authors: Holger Bonin; Rob Euwals
Abstract: The Paper studies the determinants of labour force participation by East German women after unification. To isolate the role of preferences on labour force participation from individual characteristics, we develop a panel data model that simultaneously explains participation, employment and wages. The model, estimated for East and West Germany on the basis of the German Socio-Economic Panel, indicates that distinct preferences could explain the regional difference in participation rates at unification. Afterward East German women became less willing to participate, but the negative labour supply trend was offset on the aggregate level by changes in characteristics and wages promoting participation.
Keywords: labour force participation; panel data; transitional economies
JEL Codes: C33; J21; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Preferences (D11) | Participation rates (J22) |
| Changes in individual characteristics (J62) | Participation rates (J22) |