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The Service Sector and Female Market Work: Europe vs US

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  • Michelle Rendall

    (University of Zurich)

Abstract

Aggregate market hours differ dramatically across OECD countries. However, disaggregated by sex differences in market hours do not necessarily match aggregate market hour differences. Continental Europe has seen a smaller rise in formal female employment compared with the United States or Scandinavia. Additionally, Continental Europe has a substantially smaller service sector. These facts coincide with job requirements shifting from physical strength to intellectual abilities. This paper gives empirical evidence on why women predominately work in the service sector. Given the empirical evidence, a model where technical change favoring women, by increasing the service sector, drives female employment is developed. The key is households can produce a substitute for market services and women are, on average, less productive in sectors requiring more brawn, giving them a comparative advantage with respect to staying home and working in the service sector. Therefore, an economy that does not facilitate the movement of women into the labor market, by imposing high taxes, causes service production to remain at home. This reduces the demand for market services, which feeds back into low total hours worked by women (and the total economy). Subsidies to female employment can circumvent the high tax effect, but will lead to welfare loses.

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2011 Meeting Papers with number 778.

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Date of creation: 2011
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Handle: RePEc:red:sed011:778

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  1. Michelle Rendall, 2010. "Brain versus Brawn: The Realization of Women's Comparative Advantage," 2010 Meeting Papers 926, Society for Economic Dynamics.
  2. Ingram, Beth F. & Neumann, George R., 2006. "The returns to skill," Labour Economics, Elsevier, vol. 13(1), pages 35-59, February.
  3. Richard Rogerson, 2007. "Structural Transformation and the Deterioration of European Labor Market Outcomes," NBER Working Papers 12889, National Bureau of Economic Research, Inc.
  4. Lawrence F. Katz & Kevin M. Murphy, 1991. "Changes in Relative Wages, 1963-1987: Supply and Demand Factors," NBER Working Papers 3927, National Bureau of Economic Research, Inc.
  5. Nezih Guner & Jeremy Greenwood, 2004. "Marriage and Divorce since World War II: Analyzing the Role of Technological Progress on the Formation of Households," 2004 Meeting Papers 65, Society for Economic Dynamics.
  6. Peter Rupert & Richard Rogerson & Randall Wright, 1994. "Estimating substitution elasticities in household production models," Staff Report 186, Federal Reserve Bank of Minneapolis.
  7. Fatih Guvenen & Burhanettin Kuruscu, 2009. "A quantitative analysis of the evolution of the U.S. wage distribution, 1970-2000," Staff Report 427, Federal Reserve Bank of Minneapolis.
  8. Stefania Albanesi & Claudia Olivetti, 2007. "Gender Roles and Technological Progress," Boston University - Department of Economics - Working Papers Series WP2007-029, Boston University - Department of Economics.
  9. Schoellman, Todd, 2009. "The Occupations and Human Capital of U.S. Immigrants," MPRA Paper 14236, University Library of Munich, Germany.
  10. Jeremy Greenwood & Ananth Seshadri & Mehmet Yorukoglu, 2005. "Engines of Liberation," Review of Economic Studies, Oxford University Press, vol. 72(1), pages 109-133.
  11. Richard Rogerson, 2007. "Taxation and Market Work: Is Scandinavia an Outlier?," NBER Working Papers 12890, National Bureau of Economic Research, Inc.
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Cited by:
  1. Aysegul Sahin & Stefania Albanesi, 2013. "Jobless Recoveries and Gender Biased Technological Change," 2013 Meeting Papers 985, Society for Economic Dynamics.
  2. Ngai, L. Rachel & Petrongolo, Barbara, 2014. "Gender Gaps and the Rise of the Service Economy," IZA Discussion Papers 8134, Institute for the Study of Labor (IZA).
  3. Richard Rogerson & Akos Valentinyi & Berthold Herrendorf, 2007. "Growth and Structural Transformation," 2007 Meeting Papers 757, Society for Economic Dynamics.
  4. Michelle Rendall, 2012. "Structural change in developing countries: has it decreased gender inequality?," ECON - Working Papers 077, Department of Economics - University of Zurich.
  5. Claudia Olivetti & Barbara Petrongolo, . "Gender gaps across countries and skills: Demand, supply and the industry structure," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
  6. Claudia Olivetti, 2013. "The Female Labor Force and Long-run Development: The American Experience in Comparative Perspective," NBER Chapters, in: Human Capital in History: The American Record National Bureau of Economic Research, Inc.
  7. Chakraborty, Indraneel & Stepanchuk, Serhiy & Holter, Hans A., 2012. "Marriage Stability, Taxation and Aggregate Labor Supply in the U.S. vs. Europe," Working Paper Series 2012:10, Uppsala University, Department of Economics.
  8. Du Rietz, Gunnar & Henrekson, Magnus & Waldenström, Daniel, 2012. "The Swedish Inheritance and Gift Taxation, 1885–2004," Working Paper Series 2012:18, Uppsala University, Department of Economics.
  9. L. Rachel Ngai & Barbara Petrongolo, 2013. "Gender gaps and the rise of the service economy," LSE Research Online Documents on Economics 51538, London School of Economics and Political Science, LSE Library.
  10. L. Rachel Ngai & Barbara Petrongolo, 2013. "Gender Gaps and the Rise of the Service Economy," CEP Discussion Papers dp1204, Centre for Economic Performance, LSE.

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