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Structural Modelling of Female Labour Participation and Occupation Decisions

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  • De Hoyos, R.E.
Abstract
The objective of this paper is to estimate the parameters defining female labour participation and occupation decisions. Departing from a theoretical framework, we use micro data to estimate the wage-participation elasticity in Mexico. Consistency between the selectivity-adjusted wages and the multinomial participation equations is achieved via a two-step estimation procedure following Lee (1984). We use the results of our model to test and quantify three hypotheses explaining recent increases in female labour participation in Mexico. Our results show that the observed 12 per cent increase in female labour participation in Mexico between 1994 and 2000 is explained by the combination of a negative income shock caused by the 1994-95 Peso crisis, the increase in expected wages taking place in the manufacturing sector during the post-NAFTA period and a reduction in the female reservation wage.

Suggested Citation

  • De Hoyos, R.E., 2006. "Structural Modelling of Female Labour Participation and Occupation Decisions," Cambridge Working Papers in Economics 0611, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:0611
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    References listed on IDEAS

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    5. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
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    8. R. E. De Hoyos, 2005. "SVYSELMLOG: Stata module to compute selectivity adjustment based on the multinomial logit for survey design," Statistical Software Components S454901, Boston College Department of Economics, revised 21 Sep 2005.
    9. Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-694, July.
    10. Marcouiller, Douglas & Ruiz de Castilla, Veronica & Woodruff, Christopher, 1997. "Formal Measures of the Informal-Sector Wage Gap in Mexico, El Salvador, and Peru," Economic Development and Cultural Change, University of Chicago Press, vol. 45(2), pages 367-392, January.
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    Cited by:

    1. Claudio A. Agostini & Marcela Perticara & Javiera Selman, 2023. "Tackling Vulnerable Households through a Working Tax Credit Scheme: A Feasible Alternative to Cash Transfers," Hacienda Pública Española / Review of Public Economics, IEF, vol. 245(2), pages 119-155, June.
    2. Claudio A., Agostini & Javiera, Selman & Marcela, Perticará, 2013. "Una propuesta de crédito tributario al ingreso para Chile," Estudios Públicos, Centro de Estudios Públicos, vol. 0(129), pages 49-104.
    3. Chung, Anna, 2008. "The Effects of For-Profit College Training on Earnings," MPRA Paper 18972, University Library of Munich, Germany, revised May 2009.

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    More about this item

    Keywords

    Participation; wage differentials; microsimulation; Mexico;
    All these keywords.

    JEL classification:

    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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