Changes in Women's Hours of Market Work: The Role of Returns to Experience

Claudia Olivetti

No WP2005-008, Boston University - Department of Economics - Macroeconomics Working Papers Series from Boston University - Department of Economics

Abstract: Over the past several decades, married women?s hours of market work increased signi?cantly in the US. I argue that changes in behavior by married women with children account for much of this change. In particular, the pattern of married women?s work hours has changed substantially over the life-cycle. In the past, married women in childbearing age tended to specialize in childrearing and home production activities at the expense of engaging in market work. Now they do not curb the hours worked on the market. What factors contribute to this change in behavior? In this paper, I focus on relative changes in returns to experience as an explanation. I quantitatively assess how these changes in returns to experience contributed to changes in married women?s life cycle pro?les of hours worked. I build a life-cycle model with human capital accumulation and home production in which the basic unit of analysis is a married couple with children, and calibrate it using data from the 1970s and 1990s. I show that changes in returns to experience account for a large part of the observed variation. Moreover, according to the model, the increase in returns to experience accounts for roughly half of the increase in the female/male wage ratio that is found in the data. I also show that a decline in the gender wage gap, holding returns to experience constant, cannot explain the change in the shape of women?s life cycle pro?les. Although the focus of the analysis is the labor supply behavior of women, the model also allows predictions about the behavior of men and single women. These predictions are consistent with the data.

Pages: 44 pages
Date: 2005-09, Revised 2006-06
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Citations: View citations in EconPapers (192)

Published, Review of Economic Dynamics 9, no. 4 (October 2006): 557-587.

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