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Wage and Employment Uncertainty and the Labor Force Participation Decisions of Married Women

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Francine D. Blau
Adam J. Grossberg

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Abstract

Over the past 30 years, research on married women's labor force participation has concluded vlrtua!ly without exception that the principal source of labor force participation rate growth for married women has been the concurrent growth of women's real wages. The experience of the 1970's suggests, however, that real wage growth cannot account for the Increase In participation rates that occurred during that period. This paper argues that an Important determinant of married women's current participation decisions is the level of uncertainty associated with expectations of future wages, and that high levels of uncertainty during the 1970's may have contributed sUbstantially to the growth in participation that occurred during that time. Engle's model of autoregressive conditional heteroscedastlclty (ARCH) Is appl led to aggregate time series data covering the years 1956-1986 to measure the level of uncertainty at each point In time. Our estimates Indicate support for the basic hypothesis that the level of uncertainty is an important determinant of labor force participation decisions for married women.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3081.

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Date of creation: Aug 1989
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Handle: RePEc:nbr:nberwo:3081

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  1. Block, M K & Heineke, J M, 1973. "The Allocation of Effort under Uncertainty: The Case of Risk-averse Behavior," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 376-85, Part I, M. [Downloadable!] (restricted)
  2. Amemiya, Takeshi, 1981. "Qualitative Response Models: A Survey," Journal of Economic Literature, American Economic Association, vol. 19(4), pages 1483-1536, December. [Downloadable!] (restricted)
  3. Clark, Kim B & Summers, Lawrence H, 1982. "Labour Force Participation: Timing and Persistence," Review of Economic Studies, Blackwell Publishing, vol. 49(5), pages 825-44, Special I. [Downloadable!] (restricted)
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  4. Engle, Robert F, 1982. "Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation," Econometrica, Econometric Society, vol. 50(4), pages 987-1007, July. [Downloadable!] (restricted)
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  1. Pistaferri, Luigi, 2002. "Anticipated and Unanticipated Wage Changes, Wage Risk, and Intertemporal Labour Supply," CEPR Discussion Papers 3628, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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