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Explaining the Declining Labor Supply Responsiveness of Married Women

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  • Zhiyang Jia
  • Thor O. Thoresen
  • Trine E. Vattø
  • Thor Olav Thoresen

Abstract

While the consensus in the literature is that the labor supply of married women is more responsive than that of married men, there are indications that this gap is narrowing. Our estimations of a structural discrete choice labor supply model using repeated cross-sectional data confirms this trend for Norway – the gross wage elasticity for married women decreased from approximately 0.7 in 1997 to under 0.3 in 2019. We further demonstrate how a simulation procedure based on the labor supply model offers insights into the factors driving this decline. We identify four categories of explanations: changes in the sociodemographic composition of the population, changes in preferences and labor market options, wage changes, and tax scheme changes. Our analysis suggests that general wage growth over the period is the primary reason for the decline in responsiveness among married women.

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  • Zhiyang Jia & Thor O. Thoresen & Trine E. Vattø & Thor Olav Thoresen, 2024. "Explaining the Declining Labor Supply Responsiveness of Married Women," CESifo Working Paper Series 11176, CESifo.
    • Handle: RePEc:ces:ceswps:_11176
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    Keywords

    female labor supply responsiveness; discrete choice labor supply model; microsimulation;
    All these keywords.

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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