Events at CERGE-EI

Jay Euijung Lee

London School of Economics and Political Science, United Kingdom

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Author: Jay Euijung Lee

Abstract: By how much do traditional gender norms in marriage constrain aggregate output? Married women are traditionally expected to stay home and take care of the household. This gender role reduces married women’s labor force participation, away from their comparative advantage. A low likelihood of working in the future also reduces women’s incentive to get educated. I develop a model featuring education, marriage, and labor supply choices to quantify the aggregate economic consequences of gender norms in marriage. I find that relative to single women, married women in 1940 U.S. faced a norms wedge that acted as a 44% tax on market wage. By 2010, the norms wedge had halved. Had gender norms remained at the level of 1940, married women of 2010 would have had an 18% lower labor force participation rate, 13% lower market earnings, and their total market and home output would have been lower by 7%. For the aggregate economy, total market and home output would have been 3.5% lower. I validate the model through a reduced form analysis, which uses county-level variation in World War 2 casualties that increased female labor force participation and consequently weakened traditional gender norms.

JEL codes: I25, J12, J16, J24, O47, O51

Keywords: gender roles, marriage, misallocation, labor force participation, aggregate output
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Full Text: “Marriage and Misallocation: Evidence from 70 Years of U.S. History”