Academic journal article Economic Inquiry

Quality of Available Mates, Education, and Household Labor Supply

Academic journal article Economic Inquiry

Quality of Available Mates, Education, and Household Labor Supply

Article excerpt

I. INTRODUCTION

This paper examines the effects of local quality sex ratios by metropolitan area and educational attainment on spouses' labor supply and bargaining power, using individual-level data from 2000, 1990, and 1980. There is evidence in the literature that the availability of potential mates affects the labor market decisions of married individuals, with mate availability measured as the raw number of men relative to the number of women in aggregate marriage markets (e.g., Angrist 2002; Chiappori, For tin, and Lacroix 2002; Grossbard and Amuedo-Dorantes 2007). However, the literature on sex ratios emphasizes that both the local dimension of spouse availability and the economic attractiveness of mates play a large role in marital behavior in the United States (Fossett and Kiecolt 1991; Lichter, LeClere, and McLaughlin 1991).

In this study, we further explore the role of sex ratios on bargaining power and spouses' labor supplies by constructing a refined availability measure that reflects both the local nature of marriage market conditions and their quality. We focus on educational attainment as our qualitative indicator. Education is commonly regarded as a valuable trait in marriage by which individuals assortatively match (Qian 1998; Weiss and Willis 1997). We consider local marriage markets at the metropolitan level and construct a sex ratio by three education brackets (high school [HS] graduates, some college [SC], and college-college plus [CC]), within which individuals usually sort. In the framework of a collective labor supply household model, we test whether this quality sex ratio affects the intrahousehold bargaining power of couples in the corresponding education bracket. Specifically, when the sex ratio is favorable to the wife (i.e., there is a relative scarcity of women in her education bracket), the distribution of gains from marriage is shifted in her favor, generating opposite income effects on spouses. In particular, according to collective models, if a higher number of qualified men in the wife's marriage group of reference increases female intrahousehold bargaining power, then one would expect a reduction in wives' labor supply and an increase in husbands' labor supply (Chiappori, Fortin, and Lacroix 2002).

Additionally, we investigate whether the bargaining power effect of such a sex ratio is greater for higher educated couples. Education is positively correlated with important mate attributes such as wealth and income, while marital gains from educational attainment may be more relevant for highly educated individuals. Moreover, their labor supply response to bargaining power shifts may be stronger due to their relatively more flexible labor supplies. Consequently, our contribution is also to test the theoretical prediction by Iyigun and Walsh (2007) that the sex ratio has a stronger impact on intrahousehold allocations as the assortative rank of couples, measured here by educational attainment, increases.

We use Census data at the metropolitan level for the recent decades of 2000, 1990, and 1980 to build our sex ratios. We add data from the March Supplement of the Current Population Survey (CPS) for the same years to test our labor supply prediction on married couples, using unmarried individuals as control group. Our identification strategy consists of estimating the effects of education sex ratios on husbands' and wives' labor supply and comparing changes in their labor supply behavior cross-sectionally across the U.S. metropolitan areas.

Our empirical analysis reveals that married women significantly reduce their supply of market labor, while their husbands increase theirs, as the corresponding education sex ratio becomes more favorable to women. Results are similar across decades, with a stronger impact in 1980. For instance, in 2000, we find that a 10 percentage point increase in the education sex ratio decreases annual hours worked of "SC" and "CC" wives by 10 and 26. …

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