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Labor Supply of Married Women in Credit-Constrained Households: Theory and Evidence

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  • Seik Kim
  • Nalina Varanasi

Abstract

This paper presents a new test for the family investment hypothesis (FIH). We show that a simple two-period labor supply model produces testable implications on the work hours and occupational choices for married women. In credit-constrained households, to support the family, married women work in dead-end jobs that do not necessarily require much skill. The support decreases as they overcome credit-constraints. We analyze the occupation choices for married women using a first-order Markov switching model. Our findings, based on the matched March CPS for 1996-2002, are consistent with the FIH. We replicate the annual hours worked specifications used in previous papers and demonstrate that the conventional results get reversed when the sample is confined to women who work in dead-end jobs.

Suggested Citation

  • Seik Kim & Nalina Varanasi, "undated". "Labor Supply of Married Women in Credit-Constrained Households: Theory and Evidence," Working Papers UWEC-2010-01, University of Washington, Department of Economics.
    • Handle: RePEc:udb:wpaper:uwec-2010-01
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    File URL: http://faculty.washington.edu/seikkim/seikkim_faminv.pdf
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    References listed on IDEAS

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    1. Francine D. Blau & Lawrence M. Kahn, 2007. "Changes in the Labor Supply Behavior of Married Women: 1980–2000," Journal of Labor Economics, University of Chicago Press, vol. 25(3), pages 393-438.
    2. Sarit Cohen-Goldner & Chemi Gotlibovski & Nava Kahana, 2009. "A Reevaluation Of the Role Of Family In Immigrants' Labor Market Activity;Evidence From a Comparison Of Single and Married Immigrants," Working Papers 2009-13, Bar-Ilan University, Department of Economics.
    3. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695, Elsevier.
    4. Seik Kim, "undated". "Sample Attrition in the Presence of Population Attrition," Working Papers UWEC-2009-02, University of Washington, Department of Economics.
    5. Bhattacharya, Debopam, 2008. "Inference in panel data models under attrition caused by unobservables," Journal of Econometrics, Elsevier, vol. 144(2), pages 430-446, June.
    6. Borjas, George J., 1999. "The economic analysis of immigration," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 28, pages 1697-1760, Elsevier.
    7. Basilio, Leilanie & Bauer, Thomas K. & Sinning, Mathias, 2009. "Analyzing the labor market activity of immigrant families in Germany," Labour Economics, Elsevier, vol. 16(5), pages 510-520, October.
    8. Seik Kim, "undated". "Economic Assimilation of Foreign-Born Workers in the United States: An Overlapping Rotating Panel Analysis," Working Papers UWEC-2008-19, University of Washington, Department of Economics.
    9. Long, James E, 1980. "The Effect of Americanization on Earnings: Some Evidence for Women," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 620-629, June.
    10. Cobb-Clark, Deborah & Crossley, Thomas F., 2004. "Revisiting the family investment hypothesis," Labour Economics, Elsevier, vol. 11(3), pages 373-393, June.
    11. Christopher Worswick, 1999. "Credit Constraints and the Labour Supply of Immigrant Families in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 32(1), pages 152-170, February.
    12. Baker, Michael & Benjamin, Dwayne, 1997. "The Role of the Family in Immigrants' Labor-Market Activity: An Evaluation of Alternative Explanations," American Economic Review, American Economic Association, vol. 87(4), pages 705-727, September.
    13. Francine D. Blau & Lawrence M. Kahn & Joan Y. Moriarty & Andre Portela Souza, 2003. "The Role of the Family in Immigrants' Labor-Market Activity: An Evaluation of Alternative Explanations: Comment," American Economic Review, American Economic Association, vol. 93(1), pages 429-447, March.
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    Cited by:

    1. Ana Ferrer, 2015. "Are married immigrant women secondary workers?," IZA World of Labor, Institute of Labor Economics (IZA), pages 119-119, January.
    2. Al?cia Adser? & Ana M. Ferrer, 2014. "The Myth of Immigrant Women as Secondary Workers: Evidence from Canada," American Economic Review, American Economic Association, vol. 104(5), pages 360-364, May.

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