Working Paper: CEPR ID: DP5665
Authors: Tiago Cavalcanti; Jos Tavares
Abstract: The secular rise in female labour force participation, highlighted in the recent macroeconomics literature on growth and structural change, has been associated with the declining price and wider availability of home appliances. This paper uses a new and unique country dataset on the price of home appliances to test its impact on female labour supply. We assess the role of the price of appliances in raising participation by comparing it to other structural determinants such as average male income. A decrease in the relative price of appliances - the ratio of the price of appliances to the consumer price index - leads to a substantial and statistically significant increase in female labour force participation. In the United Kingdom, for instance, the decline in the relative price of home appliances accounts alone for about 10 to 15 percent of the increase in female labour force participation from 1975 to 1999. This result is robust to the inclusion of additional controls, such as country dummies, time trend, government spending, capital to output ratio, and the growth rate of real GDP. To assess causality, we test for exogeneity and use the manufactured price index as an instrumental variable, confirming that lower appliance prices lead to increased female participation.
Keywords: business cycles; female labour force participation; home appliances; structural changes
JEL Codes: J22; O11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Relative price of home appliances (L68) | Female labor force participation (J21) |
| Decrease in relative price of home appliances (D19) | Increase in female labor force participation (J21) |
| 20% decline in relative price of home appliances (L68) | 2-3% increase in female labor force participation (J21) |
| Relative price of home appliances (L68) | Changes in female labor supply (J21) |