Specialization, Inequality, and the Labor Market for Married Women

National Bureau Of Economic Research Inc, Cambridge MA

Investigators

Abstract

Perhaps the most dramatic socioeconomic changes over the last century, and especially the last three decades, is the increasing presence of women in the labor market, the growing professional achievements of those women, and how most of the increase occurred among married women. Over the past thirty years, growing (within-gender) wage inequality has also been a dramatic and important phenomenon. Previous studies have modeled and measured inequality and female labor supply separately, even though the household specialization model implies a strong link between the two series. Such a link is evident in a variety of time series and cross-section data, and further research on household specialization is important for a full understanding of both inequality and the female labor market. Since the vast majority of prime-aged women live with a husband, this project investigates the importance of family situations by exploring some of the important implications of the household "specialization" model, and the role in which the market wage structure plays in those models. The investigator builds a simple mathematical model of household specialization and shows (a) how wage inequality can affect female labor participation, (b) why the wage structure is best understood in a family context, (c) why more wives should enter the labor force than husbands leave it, (d) why a married person's potential to be the primary family earner might be as an important predictor of behavior as his or her gender. This approach is compared to other explanations of historical female labor trends. New cross-section and longitudinal data sets are constructed for the use of other family researchers, and to further study the economics of specialization. Specifically, Census Bureau individual-level data and Population surveys spanning the years 1940-2001 are used to construct matched couples-level data sets with matched husband and wife labor market information. One of these data sets will feature repeated cross-sections, and the other repeated and overlapping two year-panels. The project also uses the data to extend the Census Bureau's time series on the fraction of married women who are the primary earner in their family (a relevant statistic for the specialization model of labor supply, and other models of household decision-making), and to explore additional cross-sectional and longitudinal implications of the household specialization model. By the end of the project, the investigator will have a full general equilibrium approach to the female labor market, endogenizing wages, fertility, life cycle profiles, and the composition of the married and single populations. This research may lead to some important and surprising conclusions. As a study of a major change in the labor force, our investigation will provide progress on general policy questions, like the determinants of aggregate employment and income, the effects of policies with the potential to distort the labor market, and the reasons why men and women have different labor market outcomes.