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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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  • Michelle Rendall, 2011. "The Service Sector and Female Market Work: Europe vs US," 2011 Meeting Papers 778, Society for Economic Dynamics.
  • Handle: RePEc:red:sed011:778
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    References listed on IDEAS

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    Cited by:

    1. Chakraborty, Indraneel & Holter, Hans A. & Stepanchuk, Serhiy, 2015. "Marriage stability, taxation and aggregate labor supply in the U.S. vs. Europe," Journal of Monetary Economics, Elsevier, vol. 72(C), pages 1-20.
    2. Du Rietz, Gunnar & Henrekson, Magnus & Waldenström, Daniel, 2012. "Swedish Inheritance and Gift Taxation, 1885–2004," Working Paper Series 2012:18, Uppsala University, Department of Economics, revised 04 Aug 2015.
    3. L. Rachel Ngai & Barbara Petrongolo, 2017. "Gender Gaps and the Rise of the Service Economy," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(4), pages 1-44, October.
    4. Claudia Olivetti & Barbara Petrongolo, 2014. "Gender gaps across countries and skills: Demand, supply and the industry structure," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(4), pages 842-859, October.
    5. Herrendorf, Berthold & Rogerson, Richard & Valentinyi, Ákos, 2014. "Growth and Structural Transformation," Handbook of Economic Growth,in: Handbook of Economic Growth, edition 1, volume 2, chapter 6, pages 855-941 Elsevier.
    6. Alexander Bick & Nicola Fuchs-Schündeln & David Lagakos, 2018. "How Do Hours Worked Vary with Income? Cross-Country Evidence and Implications," American Economic Review, American Economic Association, vol. 108(1), pages 170-199, January.
    7. Bick, Alexander & Fuchs-Schündeln, Nicola, 2017. "Taxation and Labor Supply of Married Couples across Countries: A Macroeconomic Analysis," IZA Discussion Papers 10504, Institute for the Study of Labor (IZA).
    8. Claudia Olivetti & Barbara Petrongolo, 2016. "The Evolution of Gender Gaps in Industrialized Countries," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 405-434, October.
    9. Rendall, Michelle, 2013. "Structural Change in Developing Countries: Has it Decreased Gender Inequality?," World Development, Elsevier, vol. 45(C), pages 1-16.
    10. Claudia Olivetti, 2014. "The Female Labor Force and Long-Run Development: The American Experience in Comparative Perspective," NBER Chapters,in: Human Capital in History: The American Record, pages 161-197 National Bureau of Economic Research, Inc.
    11. Claudia Olivetti & Rachel Ngai, 2015. "Structural Transformation and the U-Shaped Female Labor Supply," 2015 Meeting Papers 1501, Society for Economic Dynamics.
    12. Dürnecker, Georg & Herrendorf, Berthold, 2014. "On the Allocation of Time," Working Papers 14-09, University of Mannheim, Department of Economics.
    13. Bridgman, Benjamin, 2016. "Home productivity," Journal of Economic Dynamics and Control, Elsevier, vol. 71(C), pages 60-76.
    14. Alessio Moro & Solmaz Moslehi & Satoshi Tanaka, 2017. "Does Home Production Drive Structural Transformation?," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(3), pages 116-146, July.
    15. Aysegul Sahin & Stefania Albanesi, 2013. "Jobless Recoveries and Gender Biased Technological Change," 2013 Meeting Papers 985, Society for Economic Dynamics.
    16. Bick, Alexander & Fuchs-Schündeln, Nicola & Lagakos, David, 2016. "How do Average Hours Worked Vary with Development? Cross-Country Evidence and Implications," CEPR Discussion Papers 11092, C.E.P.R. Discussion Papers.
    17. Olivetti, Claudia & Petrongolo, Barbara, 2016. "The evolution of the gender gap in industrialized countries," CEPR Discussion Papers 11034, C.E.P.R. Discussion Papers.
    18. Nicola Fuchs-Schuendeln & David Lagakos & Alexander Bick, 2015. "Measuring and Explaining International Differences in Hours Worked," 2015 Meeting Papers 592, Society for Economic Dynamics.

    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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