Rise of the service sector and female market work: Europe vs US
AbstractContinental Europe has seen a smaller rise in formal female employment compared with the United States or the Nordic countries. Additionally, Continental Europe has a substantially smaller service sector. These facts coincide with job requirements shifting from physical strength to intellectual capacity. Given empirical evidence, this paper develops a model of endogenous technical change, where new 'technologies' can be invented to increase the productivity of brain-inputs. Two inputs, brain and brawn, are combined through CES production functions into services and industrial goods, with the production sector for goods requiring more brawn than brain. Households allocate time to working at home or the labor market, choose consumption of services and goods, and invest in new technologies. The key is households can produce a substitute for market services and women have, on average, less brawn than men, 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 technological innovation, pushing an economy into a self-reinforcing loop, where a small service sector feeds back into low total hours worked by women (and men), further depressing the service sector.
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Bibliographic InfoPaper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 492.
Date of creation: Jul 2010
Date of revision:
Technological progress; sectoral labor allocation; cross-country differences; gender wage gap; labor demand/supply.;
Find related papers by JEL classification:
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-17 (All new papers)
- NEP-DGE-2010-07-17 (Dynamic General Equilibrium)
- NEP-EEC-2010-07-17 (European Economics)
- NEP-EUR-2010-07-17 (Microeconomic European Issues)
- NEP-LAB-2010-07-17 (Labour Economics)
- NEP-MAC-2010-07-17 (Macroeconomics)
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- Rendall, Michelle, 2013.
"Structural Change in Developing Countries: Has it Decreased Gender Inequality?,"
Elsevier, vol. 45(C), pages 1-16.
- Michelle Rendall, 2012. "Structural change in developing countries: has it decreased gender inequality?," ECON - Working Papers 077, Department of Economics - University of Zurich.
- 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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