Fertility or the fridge?

What explains the massive increase in women's labour force participation over the last three or four decades? Several factors have been pointed to as the root cause of this increase, including cultural and social changes, and the marked decrease in fertility rates. For a survey, see Jaumotte's 2003 OECD working paper. On "the power of the pill", see Goldin and Katz's 2002 JPE paper (PDF here).

A new paper by Tiago V. de V. Cavalcanti and Jose Tavares focusses on another possible factor: home appliances. Here is the abstract for Assessing the “Engines of Liberation”: Home Appliances and Female Labor Force Participation (PDF):

The secular rise in female labor force participation, highlighted in the recent macroeconomics literature on growth and structural change, has been associated with the declining price and wider availability of home appliances. This paper uses a new and unique country dataset on the price of home appliances to test its impact on female labor supply.

We assess the role of the price of appliances in raising participation by comparing it to the impact of fertility and other macroeconomic factors. A decrease in the relative price of appliances - the ratio of the price of appliances to the consumer price index - leads to a substantial and statistically significant increase in female labor force participation. The impact of the price of appliances is quantitatively of the same order of magnitude as that of fertility.

This result is robust to the inclusion of additional controls, such as income per capita, government spending, and male and female unemployment rates. To assess causality, we test for exogeneity and use the lagged relative price of appliances and the food price index as instrumental variables, confirming that lower appliance prices lead to increased female participation.

This paper is one of many to be presented at the European Association of Labour Economist anual conference in Prague, which commences Friday. This week I'll be featuring a number of other papers from the conference.

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