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The service sector and female market work

  • Michelle Rendall

This paper develops a multi-sector model to: (i) quantify the feedback from women entering the labor force on the service sector size, and (ii) compute differences in hours worked by gender from taxes, structural change and female employment. Increases in female employment, due to rising wages and structural change, account for a sizable portion of services. Counterfactual results suggest that: (1) working women account for 32 percent of the rise in service employment; (2) using standard micro estimates of Frisch elasticities with two-person households, tax rates account for the majority of Europe-US differences in hours worked, and (3) subsidies to employment circumvent the tax effect on hours, but lead to welfare losses of 5 to 8 percent. The second result validates the relationship between tax levels and hours worked first proposed by Prescott (2004) without using large Frisch elasticities.

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Paper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 492.

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Date of creation: Jul 2010
Date of revision: Feb 2014
Handle: RePEc:zur:iewwpx:492
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  1. Claudia Olivetti, 2006. "Changes in Women's Hours of Market Work: The Role of Returns to Experience," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(4), pages 557-587, October.
  2. Jeremy Greenwood & Nezih Guner, 2009. "Marriage and Divorce since World War II: Analyzing the Role of Technological Progress on the Formation of Households," NBER Chapters, in: NBER Macroeconomics Annual 2008, Volume 23, pages 231-276 National Bureau of Economic Research, Inc.
  3. Rupert, Peter & Rogerson, Richard & Wright, Randall, 1995. "Estimating Substitution Elasticities in Household Production Models," Economic Theory, Springer, vol. 6(1), pages 179-93, June.
  4. Albanesi, Stefania & Olivetti, Claudia, 2007. "Gender Roles and Technological Progress," CEPR Discussion Papers 6352, C.E.P.R. Discussion Papers.
  5. Katz, L.F. & Murphy, K.M., 1991. "Changes in Relative Wages, 1963-1987: Supply and Demand Factors," Harvard Institute of Economic Research Working Papers 1580, Harvard - Institute of Economic Research.
  6. Fatih Guvenen & Burhanettin Kuruscu, 2010. "A Quantitative Analysis of the Evolution of the U.S. Wage Distribution, 1970-2000," NBER Chapters, in: NBER Macroeconomics Annual 2009, Volume 24, pages 227-276 National Bureau of Economic Research, Inc.
  7. Richard Rogerson, 2007. "Taxation and Market Work: Is Scandinavia an Outlier?," NBER Working Papers 12890, National Bureau of Economic Research, Inc.
  8. Jeremy Greenwood & Ananth Seshadri & Mehmet Yorukoglu, 2005. "Engines of Liberation," Review of Economic Studies, Oxford University Press, vol. 72(1), pages 109-133.
  9. Richard Rogerson, 2008. "Structural Transformation and the Deterioration of European Labor Market Outcomes," Journal of Political Economy, University of Chicago Press, vol. 116(2), pages 235-259, 04.
  10. Ingram, Beth F. & Neumann, George R., 2006. "The returns to skill," Labour Economics, Elsevier, vol. 13(1), pages 35-59, February.
  11. Todd Schoellman, 2009. "The Occupations and Human Capital of U.S. Immigrants," EERI Research Paper Series EERI_RP_2009_19, Economics and Econometrics Research Institute (EERI), Brussels.
  12. Michelle Rendall, 2010. "Brain versus Brawn: The Realization of Women's Comparative Advantage," 2010 Meeting Papers 926, Society for Economic Dynamics.
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