The Participation of Couples in the Labor Market: An Econometric Analysis

Abstract

This paper examines the interactions between household members' utilities when deciding whether or not to join the labor market. Using asymptotic least squares, we analyze a sample of 5425 couples living in France in 1997. By comparing the results obtained with more standard methods, we find that the man's participation equation is the most affected by the introduction of simultaneous decision making in the couple. The woman's decision to participate has a positive and significant influence on their spouse's decision to work, as do the number of children and the birth of a new child. The fact that the presence of children increases the participation of men and reduces the participation of women suggests that the added-worker effect should be interpreted more as a demographic phenomenon than as a consequence of unemployment.