Wednesday, May 23, 2012

Why Do American Women Work More Than Europeans?

According to economists Indraneel Chakraborty, Hans Holter, and Serhiy Stepanchuck, the answer lies in differences in divorce rates:
[W]e find a strong positive correlation between divorce rates and hours worked by women, whereas male hours and divorce rates are completely unrelated… 
Why would the likelihood of divorce affect the decision of females to work? 
We believe this is because marriage provides an implicit social insurance since the spouses are able to share their income. However, if divorce rates are higher in a society, women have a higher incentive to obtain work experience in case they find themselves alone in the future. The reason the incentive is higher is because in our data, women happen to be the second earner in the household more often than men. European women anticipate not getting divorced as often and hence find less reason to insure themselves by working as much as American women…  
We find that stable marriages lead to a reduction in labour supply. Both in the data and in the model the effect is on the extensive margin, i.e. whether women will choose to work or not. 
According to their research differences in tax rates also play a significant roll.
In our counterfactual economy, if just marriage stability in US were the same as in the European countries, it explains 24% of the cross-country variation in hours worked for females. When we also introduce European taxes, we are able to explain 43% of the variation in female work hours across the continents.
If this theory is correct, does that imply lower hours worked by American women who are at lower risk of divorce than the general population?  (Such as weekly church attenders and highly educated women.)

(HT Freakonomics)

1 comment:

Amy said...

I know I tend toward an irrationally feminist viewpoint, but I find this to be an odd conclusion. I would argue that perhaps the higher divorce rates are a result of higher hours worked by women, instead of the other way around. I think it's possible that providing one's own income creates a sense of freedom. Perhaps American women enjoy working and know that they don't need to rely on someone else to provide income.