Gender Complementarities in the Labor Market☆We would like to thank Kostas Tatsiramos, Solomon Polachek and two anonymous referees for their constructive comments. We are also indebted to Massimo Anelli, Magda Bianco, Benjamin Elsner, Francesca Lotti, Anna Laura Mancini, Elisabetta Olivieri, Daniele Paserman, Emiliano Rustichelli, Ugo Troiano, Roberta Zizza, and seminar participants at the Bank of Italy, Bocconi University, the XXVIII Annual Congress of the European Economic Association and the IZA Workshop on Gender Convergence. Davide Crapis provided able research assistance. Part of this project was completed while Giacomo De Giorgi and Marco Paccagnella were visiting UC Berkeley, which they wish to thank for the hospitality. Giacomo De Giorgi is also Research Professor (on leave) at ICREA/MOVE, Barcelona GSE and UAB. The views expressed in this paper are solely those of the authors and do not necessarily reflect those of the OECD or the Bank of Italy

In this paper we provide estimates of the short-run elasticity of substitution between male and female workers, using data from Italian provinces for the period 1993–2006. Our identification strategy relies on a natural experiment. In 2000, the Italian Parliament passed a law to abolish compulsory military service. The reform was implemented through a gradual reduction in the number of draftees; compulsory drafting was eventually terminated in 2004. We use data on the (planned) maximum number of draftees at the national level (as stated in the annual budgetary law), interacted with sex-ratios at births at the provincial level, as instruments for (relative) female labor supply. Our results suggest that young males and females (who are those mainly affected by the reform) are imperfect substitutes, with an implied elasticity of substitution ranging between 1.0 and 1.4. Our results have important implications for the evaluation of policies aimed at increasing female labor market participation.