Literature Review - Work Choices of Married Women

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Literature review

The labour supply of women has been the subject of extensive study both in Australia and internationally.1 Despite this, only a few international and Australian studies have examined the inter-temporal labour supply behaviour of women, and it remains a less understood area of labour supply research (Hyslop 1999).2 However, study in this area is growing rapidly due to the increasing availability of panel data and improved computational power and techniques. This chapter reviews a selection of studies of inter-temporal labour supply of women in Australian and overseas.

Past research

Several international studies have examined inter-temporal persistence in labour supply. Shaw (1994) used the Panel Study of Income Dynamics (PSID) over the period 1967-1987 to measure persistence in (annual) working hours of white women in the United States. She found evidence of (statistically) significant persistence in an individual’s labour supply even after controlling for other influencing factors — such as wages, the age and number of children and individual health status. Further, the extent of persistence was found to have changed little over the 20 year period studied. Shaw also found that unobserved (time invariant) individual heterogeneity played an important role in the persistence. However, the study did not examine whether the persistence also resulted from unobserved transitory shocks (or errors) that might be serially correlated. Hyslop (1999), also using the PSID data (for the period 1979-1985), examined the dynamics of labour force participation of married women in the United States and found evidence of state dependence. While unobserved individual heterogeneity was found to contribute to the persistence of labour force participation, transitory 1 For a detailed survey of the international literature on women’s labour supply, see Killingsworth (1983), Killingsworth and Heckman (1986) and Heckman (1993). 2 A few studies also examine...
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