Structural Modelling of Female Labour Participation and Occupation Decisions

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Structural Modelling of Female Labour Participation and Occupation Decisions

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De Hoyos, R.E.

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Rafael E. De Hoyos

Abstract

The objective of this paper is to estimate the parameters defining female labour participation and occupation decisions. Departing from a theoretical framework, we use micro data to estimate the wage-participation elasticity in Mexico. Consistency between the selectivity-adjusted wages and the multinomial participation equations is achieved via a two-step estimation procedure following Lee (1984). We use the results of our model to test and quantify three hypotheses explaining recent increases in female labour participation in Mexico. Our results show that the observed 12 per cent increase in female labour participation in Mexico between 1994 and 2000 is explained by the combination of a negative income shock caused by the 1994-95 Peso crisis, the increase in expected wages taking place in the manufacturing sector during the post-NAFTA period and a reduction in the female reservation wage.

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Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0611.

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Length: 36
Date of creation: Feb 2006
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Handle: RePEc:cam:camdae:0611

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Find related papers by JEL classification:
C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

This paper has been announced in the following NEP Reports:

NEP-ALL-2006-02-19 (All new papers)
NEP-HRM-2006-02-19 (Human Capital & Human Resource Management)
NEP-LAB-2006-02-19 (Labour Economics)

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R. E. De Hoyos, 2005. "SVYSELMLOG: Stata module to compute selectivity adjustment based on the multinomial logit for survey design," Statistical Software Components S454901, Boston College Department of Economics, revised 21 Sep 2005. [Downloadable!]
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Marcouiller, Douglas & Ruiz de Castilla, Veronica & Woodruff, Christopher, 1997. "Formal Measures of the Informal-Sector Wage Gap in Mexico, El Salvador, and Peru," Economic Development and Cultural Change, University of Chicago Press, vol. 45(2), pages 367-92, January.
Other versions:
- Douglas Marcouiller, S.J. & Veronica Ruiz de Castilla & Christopher Woodruff, 1995. "Formal Measures of the Informal Sector Wage Gap in Mexico, El Salvador, and Peru," Boston College Working Papers in Economics 294., Boston College Department of Economics. [Downloadable!]
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Gong, Xiaodong & van Soest, Arthur & Villagomez, Elizabeth, 2000. "Mobility in the Urban Labor Market: A Panel Data Analysis for Mexico," IZA Discussion Papers 213, Institute for the Study of Labor (IZA). [Downloadable!]
Other versions:
- Gong, X. & Soest, A. van & Villagomez, E., 2000. "Mobility in the urban labor market : a panel data analysis for Mexico," Discussion Paper 46, Tilburg University, Center for Economic Research. [Downloadable!]
- Gong, Xiaodong & Van Soest, Arthur & Villagomez, Elizabeth, 2004. "Mobility in the Urban Labor Market: A Panel Data Analysis for Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 53(1), pages 1-36, October.
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Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January. [Downloadable!] (restricted)
McFadden, Daniel, 1974. "The measurement of urban travel demand," Journal of Public Economics, Elsevier, vol. 3(4), pages 303-328, November. [Downloadable!] (restricted)
Heckman, James J, 1993. "What Has Been Learned about Labor Supply in the Past Twenty Years?," American Economic Review, American Economic Association, vol. 83(2), pages 116-21, May. [Downloadable!] (restricted)
De Hoyos, Rafael E., 2005. "The Microeconomics of Inequality, Poverty and Market Liberalizing Reforms," Working Papers RP2005/63, World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
Maloney, William F, 1999. "Does Informality Imply Segmentation in Urban Labor Markets? Evidence from Sectoral Transitions in Mexico," World Bank Economic Review, Oxford University Press, vol. 13(2), pages 275-302, May.
Heckman, James J & Sedlacek, Guilherme, 1985. "Heterogeneity, Aggregation, and Market Wage Functions: An Empirical Model of Self-selection in the Labor Market," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1077-1125, December. [Downloadable!] (restricted)
Heckman, James J & Honore, Bo E, 1990. "The Empirical Content of the Roy Model," Econometrica, Econometric Society, vol. 58(5), pages 1121-49, September. [Downloadable!] (restricted)
François Bourguignon & Martin Fournier & Marc Gurgand, 2004. "Selection Bias Corrections Based on the Multinomial Logit Model: Monte-Carlo Comparisons," DELTA Working Papers 2004-20, DELTA (Ecole normale supérieure). [Downloadable!]
Other versions:
- François Bourguignon & Martin Fournier & Marc Gurgand, 2007. "Selection Bias Corrections Based On The Multinomial Logit Model: Monte Carlo Comparisons," Journal of Economic Surveys, Blackwell Publishing, vol. 21(1), pages 174-205, 02. [Downloadable!] (restricted)

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