Abstract
We study the behavior of female labor force participation (LFP) over the business cycle by estimating fixed effects models at the country and population-group level, using data from harmonized national household surveys of 18 Latin American countries in the period 1987–2014. We find that female LFP follows a countercyclical pattern—especially in the case of married, with children and vulnerable women—which suggests the existence of an inverse added-worker effect. We argue that this factor may have contributed to the deceleration in female labor supply in Latin America that took place in the 2000s, a decade of unusual high economic growth.
Highlights
Over more than 50 years female labor force participation (LFP) has been increasing markedly and steadily in almost all regions of the world
The relevance of the addedworker effect (AWE) with regard to female LFP relies on a typical income effect that arises at the household level in the context of a unitary model that assumes that women are secondary workers and that leisure is a normal good
An improved macroeconomic context can encourage female LFP through a substitution effect, but on the other hand it can depress female labor supply because the better economic situation in the household alleviates the pressure on women to look for a job outside the house, allowing them to postpone their entry into the labor market
Summary
Over more than 50 years female labor force participation (LFP) has been increasing markedly and steadily in almost all regions of the world. A better economic scenario may imply lower unemployment and higher earnings of male partners and the expansion of social safety nets, two factors that alleviate the pressure on other family members, especially female spouses, to look for a job, and negatively affect their LFP (income effect) This latter channel, a version of the typical added-worker effect, could have been more relevant for women in vulnerable households in Latin America, since (i) their labor supply is more elastic to income shocks, either coming from earned or unearned income, Serrano et al J Labour Market Res (2019) 53:13 and (ii) their households were the most benefitted by the economic changes in the 2000s.
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