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Dynamics of Female Labor Force Participation and Welfare with Multiple Social Reference Groups

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  • Mihaela Pintea

    (Department of Economics, Florida International University)

Abstract

I develop a model with status concerns to analyze how different economic factors affect female labor participation and welfare, as well as average household incomes and wages. Reductions in the price of domestic goods and increases in female wages have positive effects on female participation. Increases in male wages have different effects on female participation depending on whether they affect female wages or not. Events that lead to increases in female participation are usually associated with decreases in the welfare of stay-at-home wives but are not necessarily associated with increases in welfare of working wives. Allowing for part-time work can lead to an increase in overall female labor force participation, but some women that would have worked full-time end up working part-time. If female wages are endogenous, an increase in male wages leads to an increase in the female participation rate even if it is not associated with a decrease in the gender wage gap. The positive feedback of increased female participation on their wages can lead to hysteresis of dual equilibria of high and low female labor force participation and a discontinuous transition between these equilibria.

Suggested Citation

  • Mihaela Pintea, 2019. "Dynamics of Female Labor Force Participation and Welfare with Multiple Social Reference Groups," Working Papers 1901, Florida International University, Department of Economics.
  • Handle: RePEc:fiu:wpaper:1901
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    References listed on IDEAS

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    More about this item

    Keywords

    Female Labor Force Participation; Relative Income; Gender Wage Gap;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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