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All In The Family: Family, Income, And Labor Force Attachment

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  • Janet Netz
  • Jon Haveman
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    Abstract

    Empirical labor market studies often do not include controls for family and income structure. Because these variables are significantly correlated with many of the variables commonly included, such as education, estimated coefficients are subject to omitted variable bias. We demonstrate how omission of family and income variables can lead to statistically biased coefficient estimates on nonfamily variables and can lead to false inferences by examining labor force attachment of workers who have lost their previous job. The traditional variables most biased by the omission of family and income characteristics are education, displacement age, and predicted pre-displacement wages. As an indication of the extent of the bias, we calculate expected labor force participation rates for single women, married women, and married men using the average characteristics for each group using both the biased and unbiased coefficients. We find a 50 percent reduction in the extent to which market-oriented opportunities explain the differences in observed labor force attachment between married women and men when family characteristics are included relative to when they are not.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/135457099337824
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Feminist Economics.

    Volume (Year): 5 (1999)
    Issue (Month): 3 ()
    Pages: 85-106

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    Handle: RePEc:taf:femeco:v:5:y:1999:i:3:p:85-106

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    Related research

    Keywords: Labor Force Participation; Omitted Variable Bias;

    References

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    1. Carling, Kenneth & Edin, Per-Anders & Harkman, Anders & Holmlund, Bertil, 1996. "Unemployment duration, unemployment benefits, and labor market programs in Sweden," Journal of Public Economics, Elsevier, vol. 59(3), pages 313-334, March.
    2. Steven Stern, 1989. "Measuring the Effect of Disability on Labor Force Participation," Journal of Human Resources, University of Wisconsin Press, vol. 24(3), pages 361-395.
    3. Maloney, Tim, 1991. "Unobserved Variables and the Elusive Added Worker Effect," Economica, London School of Economics and Political Science, vol. 58(230), pages 173-87, May.
    4. John T. Addison & Pedro Portugal, 1987. "The effect of advance notification of plant closings on unemployment," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 41(1), pages 3-16, October.
    5. David Neumark, 1993. "Sex Discrimination and Women's Labor Market Interruptions," NBER Working Papers 4260, National Bureau of Economic Research, Inc.
    6. Mroz, Thomas A, 1987. "The Sensitivity of an Empirical Model of Married Women's Hours of Work to Economic and Statistical Assumptions," Econometrica, Econometric Society, vol. 55(4), pages 765-99, July.
    7. Robert G. Valletta, 1991. "Job Tenure and Joblessness of Displaced Workers," Journal of Human Resources, University of Wisconsin Press, vol. 26(4), pages 726-741.
    8. Orley Ashenfelter & James Heckman, 1971. "The Estimation of Income and Substitution Effects in a Model of Family Labor Supply," Working Papers 402, Princeton University, Department of Economics, Industrial Relations Section..
    9. Addison, John T & Portugal, Pedro, 1989. "Job Displacement, Relative Wage Changes, and Duration of Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 7(3), pages 281-302, July.
    10. Romme, A. Georges L., 1990. "Projecting female labor supply: The relevance of social norm change," Journal of Economic Psychology, Elsevier, vol. 11(1), pages 85-99, March.
    11. Valletta, R.G., 1990. "Job Tenure And Joblessness Of Displaced Workers," Papers 89-90-5, California Irvine - School of Social Sciences.
    12. Haurin, Donald R, 1989. "Women's Labor Market Reactions to Family Disruptions," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 54-61, February.
    13. Kell, Michael & Wright, Jane, 1990. "Benefits and the Labour Supply of Women Married to Unemployed Men," Economic Journal, Royal Economic Society, vol. 100(400), pages 119-26, Supplemen.
    14. Jacob Mincer, 1962. "Labor Force Participation of Married Women: A Study of Labor Supply," NBER Chapters, in: Aspects of Labor Economics, pages 63-106 National Bureau of Economic Research, Inc.
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    Cited by:
    1. Judith Robinson, 2002. "Race, Gender, and Familial Status: Discrimination in One US Mortgage Lending Market," Feminist Economics, Taylor & Francis Journals, vol. 8(2), pages 63-85.

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