Working Paper: NBER ID: w19869
Authors: Raquel Fernández; Joyce C. Wong
Abstract: This paper develops a quantitative life-cycle model to study the increase in married women's labor force participation (LFP). We calibrate the model to match key life-cycle statistics for the 1935 cohort and use it to assess the changed environment faced by the 1955 cohort. We find that a higher divorce probability and changes in wage structure are each able to explain a large proportion of the LFP increase. Higher divorce risk increases LFP not because the latter contributes to higher marital assets or greater labor market experience, however. Instead, it is the result of conflicting spousal preferences towards the adjustment of marital consumption in the face of increased divorce risk.
Keywords: divorce risk; female labor force participation; lifecycle model; wage structure
JEL Codes: I3; J12; J13; J16; K36
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher divorce probability (J12) | Married women's labor force participation (LFP) (J21) |
| Conflicting spousal preferences regarding marital consumption adjustments (D10) | Higher divorce probability (J12) |
| Higher divorce probability (J12) | Increased labor participation among married women (J49) |
| Higher divorce probability (J12) | Married household savings decrease (D14) |
| Higher divorce probability (J12) | Conflict in household bargaining (D13) |