Heim, Bradley T. 2007. “The Incredible Shrinking Elasticities: Married Female Labor Supply, 1978–2002.” Journal of Human Resources 42(4): 881–918.
This paper demonstrates the extent to which married women’s labor supply elasticities have changed over the past quarter century. Estimates from March Current Population Survey data suggest that these elasticities have decreased substantially, by 60 percent for the hours wage elasticity (from 0.36 to 0.14), 70 percent for the hours income elasticity (from -0.053 to -0.015), 95 percent for the participation wage elasticity (from 0.66 to 0.03), and 60 percent for the participation income elasticity (from -0.13 to -0.05). Changing demographic characteristics explain little of the drop in these elasticities, suggesting that preferences toward work have changed across birth cohorts.
Bradley Heim is a financial economist in the Office of Tax Analysis, U.S. Department of the Treasury. Substantial work on this paper was completed when the author was an Assistant Professor at Duke University. He wishes to thank Peter Arcidiacono, Marjorie McElroy, Bruce Meyer, Tom Mroz, Chris Taber, and Ron Warren, seminar participants at Duke University, the University of Wisconsin-Madison, the Federal Reserve Bank of Chicago, the University of Chicago Harris School, the 2005 SOLE Meetings and 2006 NTA Meetings, and two anonymous referees for helpful advice and comments. All remaining errors are the author’s. The views expressed are those of the author and do not necessarily reflect those of the Department of the Treasury. The data used in this article can be obtained beginning May 2008 through April 2011 from Bradley T. Heim, Office of Tax Analysis, U.S. Department of Treasury, Room 4036B, 1500 Pennsylvania Ave NW, Washington, DC 20220, or Bradley.Heim@do.treas.gov.