Further developments in the dynamics of female labour force participation

Abstract

Papers attempting to explain female labour force participation either do not include women-specific variables or lack a proper dynamic specification. In this paper, we estimate a dynamic equation for female labour force participation in OECD countries from 1980 to 2007, taking into account several sets of variables. Moreover, we use our model to predict the results for 2007–2011, and we find that our model adjusts quite well to the actual data even with regard to the out-sample observations during the ongoing recession. In order to gain further insight concerning the interpretation and robustness of the equation, it is then compared to a similar equation for males. Our results show that real wage is one of the most relevant variables for female participation. Thus our specification could also be useful to endogenise labour force participation for a macro-labour market framework such as that of Layard et al. (1991, rev. 2005). However, women’s preferences, the overall level of education, and other structural factors are also important.