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Changes in Women's Hours of Market Work: The Role of Returns to Experience

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Author Info
Claudia Olivetti (Boston University)

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Abstract

Over the past several decades, married women's hours of market work increased significantly in the US. I argue that changes in behavior by married women with children account for much of this change. In particular, the pattern of married women's work hours has changed substantially over the life-cycle. In the past, married women in childbearing age tended to specialize in childrearing and home production activities at the expense of engaging in market work. Now they do not curb the hours they work in the market. What factors contribute to this change in behavior? In this paper, I focus on relative changes in returns to experience as an explanation. I use PSID data for the 1970s and the 1990s to estimate the extent to which relative returns to experience have changed. I then use a life-cycle model with human capital accumulation and home production to quantitatively assess the consequences of this increase for married women's hours of work over the life-cycle. The estimates of the human capital production function show that women's marginal returns to experience increased by 25% across decades, whereas men's increased by only 6%. I show that this relative change accounts for 96% of the observed variation in married women's hours of work. Moreover, according to the model, the increase in returns to experience accounts for roughly half of the increase in the female/male wage ratio that is found in the data. I also show that a decline in the gender wage gap, holding returns to experience constant, accounts for only 18% of the total increase in hours of work. As a consequence, it cannot explain the change in the shape of women's life-cycle profiles. Although the focus of the analysis is the labor supply behavior of women, the model also allows predictions about the behavior of men and single women. These predictions are consistent with the data. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/j.red.2006.06.001
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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 9 (2006)
Issue (Month): 4 (October)
Pages: 557-587
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Handle: RePEc:red:issued:05-95

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Related research
Keywords: Married women's labor supply Learning-by-doing Returns to experience Child care

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Find related papers by JEL classification:
D1 - Microeconomics - - Household Behavior
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Richard Rogerson, 2006. "Understanding Differences in Hours Worked," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(3), pages 365-409, July. [Downloadable!] (restricted)
  2. Greenwood, Jeremy & Guner, Nezih, 2007. "Marriage and Divorce since World War II: Analyzing the Role of Technological Progress on the Formation of Households," CEPR Discussion Papers 6391, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Stefania Albanesi & Claudia Olivetti, 2007. "Home production, market production and the gender wage gap: Incentives and expectations," Discussion Papers 0607-10, Columbia University, Department of Economics. [Downloadable!]
    Other versions:
  4. Raquel Fernandez & Alessandra Fogli & Claudia Olivetti, 2002. "Marrying Your Mom: Preference Transmission and Women's Labor and Education Choices," NBER Working Papers 9234, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Merz, Monika, 2004. "Women's Hours of Market Work in Germany: The Role of Parental Leave," IZA Discussion Papers 1288, Institute for the Study of Labor (IZA). [Downloadable!]
  6. Claudia Goldin, 2006. "The Quiet Revolution that Transformed Women's Employment, Education, and Family," NBER Working Papers 11953, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2008. "The Macroeconomic Implications of Rising Wage Inequality in the United States," NBER Working Papers 14052, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  8. de la Rica, Sara & Dolado, Juan José & García-Peñalosa, Cecilia, 2008. "On Gender Gaps and Self-fulfilling Expectations: Theory, Policies and Some Empirical Evidence," IZA Discussion Papers 3553, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  9. Matthias Doepke & Moshe Hazan & Yishay D. Maoz, 2007. "The Baby Boom and World War II: A Macroeconomic Analysis," IZA Discussion Papers 3253, Institute for the Study of Labor (IZA). [Downloadable!]
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  10. Matthias Doepke & Moshe Hazan & Yishay D. Maoz, 2006. "The Baby Boom and World War II: The Role of Labor Market Experience," DEGIT Conference Papers c011_026, DEGIT, Dynamics, Economic Growth, and International Trade. [Downloadable!]
    Other versions:
  11. Ellen R. McGrattan & Richard Rogerson, 2007. "Changes in the distribution of family hours worked since 1950," Staff Report 397, Federal Reserve Bank of Minneapolis. [Downloadable!]
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