Regional Female Labour Force Participation: An Empirical Application with Spatial Effects

Abstract

The female labour force participation rate (LFPR) displays a high degree of variation across regions. Our paper contributes to an understanding of regional determinants of female labour supply by looking at Austria’s 121 political districts. As predicted by theory, the aggregate wage level has a positive impact on female LFPRs. We also find that a decrease in the gender wage gap increases the female participation ratio. Population density is positively associated with the female participation rate. This indicates that densely populated areas provide a larger and better array of employment opportunities for female workers. Furthermore, child-care provision for young children is significant and positive. Our model, based on a reduced-form equation, is tested for robustness using various specifications and extended with a spatial econometrics approach. We find that estimated relationships between traditional regional labour supply determinants are sensitive to the inclusion of spatial effects. The spatial parameter is negative, indicating that regions with high participation levels are surrounded by areas with significantly lower participation levels.