Working Paper: NBER ID: w4707
Authors: Claudia Goldin
Abstract: The labor force participation rate of married women first declines and then rises as countries develop. Its þ-shape is revealed both across the process of economic development and through the histories of currently advanced countries. The initial decline in the participation rate is due to the movement of production from the household, family farm, and small business to the wider market, and to a strong income effect. But the income effect weakens and the substitution effect strengthens at some point. This paper explores why the change takes place and why the þ-shape is traced out. When women are poorly educated their only wage labor outside the home and family is in manual work, against which a strong social stigma exists. But when women are educated, particularly at the secondary level, they enter white-collar work, against which no social stigma exists. Data for more than one-hundred countries and for United States history are used to explore the hypothesis of the þ-shaped female labor force function.
Keywords: female labor force; economic development; gender equality; education
JEL Codes: J16; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| income effect (D12) | labor force participation of married women (D13) |
| social norms change (Z13) | labor force participation of married women (D13) |
| income effect dominance (D11) | substitution effect dominance (D11) |
| economic development (O29) | labor force participation of married women (D13) |
| education (I29) | labor force participation of married women (D13) |
| education (I29) | U-shaped curve in labor force participation (J49) |