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Inequality and Household Labor Supply

María José Prados () and Stefania Albanesi ()

No 657, 2011 Meeting Papers from Society for Economic Dynamics

Abstract: This paper accounts for the decline in the labor force participation of married women in the US since 1995. We first document that this phenomenon is mainly driven by a decline in participation of college women married to high earning men. We argue that the rise in skill premium and especially the rise in wages for highly qualified workers is a factor in this phenomenon. We develop a household model of labor supply in which the rise in wages for highly skilled male workers, in conjunction with the gender gap in wages, generates a negative wealth effect that discourages participation and reduces hours for their spouses. A version of the model that incorporates on the job learning/training endogenously generates the rise in gender wage gaps for high skill workers, which is also consistent with the US experience post 1995.

Date: 2011
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More papers in 2011 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
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