The independent woman—locus of control and female labor force participation

Abstract

This paper contributes to the research on heterogeneity in labor force participation decisions between women. This is done by discussing the role of the personality trait locus of control (LOC), a measure of an individual’s belief about the causal relationship between behavior and life outcomes, for differences in participation probabilities. The association between LOC and participation decisions is tested using German survey data, finding that internal women are on average 13 percent more likely to participate in the labor force. These findings are also found to translate into higher employment probabilities at the extensive and intensive margin as well as in a lifetime perspective. Additional analyses identify a strong heterogeneity of the relationship with respect to underlying monetary constraints and social working norms. In line with the existing literature, an important role of LOC for independence preferences as well as subjective beliefs about returns to investments are proposed as theoretical explanations for the findings.