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Do Austrian men and women become more equal? At least in terms of labour supply!

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Abstract

We study the development of wage elasticity of labour supply for Austrian men and women over time using comparable and representative survey data for the 1980s and 1990s. The elasticity of men is relatively low and constant over time, similar to the behaviour of single women. Most remarkable is the almost continuous reduction in the labour supply reactions of married women: while their elasticity was still several times larger at the beginning of the 1980s, they approached rapidly the much less elastic behaviour of men. These developments are important for the analysis of deadweight losses of taxation as well as the effects of tax reforms and wage subsidy programs.

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Notes

  1. See Kuismanen (2007) for a similar exercise for Finland as well as Aronsson and Walker (2007) for an overview of estimates for Sweden.

  2. As variables in the participation equation we use education levels, (potential) experience, as identifying variables the number of children in different age groups and disposable household income. These variables are supposed to influence only participation but not wages. Evidence for the strong influence of these variables is shown also in the structural participation equation (Table 1).

  3. Typical results for the wage regressions are in Appendix A (Table 5).

  4. Such a group-based instrumentation strategy is suggested by Angrist (1991) in particular to combat measurement error problems in hourly wages, which typically will arise from surveys where hourly wages are constructed by information about monthly incomes and hours worked. Estimates of non-instrumented wage elasticities—which are fairly similar to the ones shown below—can be received upon request.

  5. Labour force participation is defined as working at least 1 h per week or being unemployed but actively seeking for a job.

  6. Del Bono et al. (2011) find that compatibility of career and family is still a problem for Austrian women, in particular for those in better-paying and more career-oriented jobs. The study investigates fertility rates only and does only look at one point in time.

  7. While statistically different from zero in all years, the point estimates are always below 0.03.

  8. See Bishop et al. (2005) for US evidence on the development of single women’s wage elasticity over time, which are also smaller and somewhat falling.

  9. We only observe wage income in the Micro-Census. Because of that the spouses’ income takes by far the largest share of other household income. In fact for 75% of all households in 1987 the spouses’ income is identical to the other household income. This ratio decreases to 71% in 1999.

  10. The share of married women in our sample decreased from around 75–68% over time.

  11. We instrument for wages as above and calculate bootstrapped standard errors.

  12. It would be beyond the topic of this paper to deal in detail with changes in parental leave policies: See Lalive and Zweimüller (2009) as well Lalive et al. (2010) for excellent treatment of this issue for Austria, as well as Merz (2005) or Ludsteck and Schönberg (2008) for Germany.

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Acknowledgments

This research was supported by a grant from the Austrian National Bank (Jubiläumsfonds) and the FWF. Thanks for helpful comments to two referees, René Böheim, Helmut Hofer and Doris Weichselbaumer.

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Authors and Affiliations

  1. Austrian Institute for Family Studies, University of Vienna, Vienna, Austria

    Georg Wernhart

  2. Universität Linz and Institute for Advanced Studies, Vienna, Austria

    Rudolf Winter-Ebmer

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  1. Georg Wernhart
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  2. Rudolf Winter-Ebmer
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Correspondence to Rudolf Winter-Ebmer.

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Rudolf Winter-Ebmer is also associated with CEPR, London and IZA, Bonn.

Appendices

Appendix A

See Tables 4 and 5.

Table 4 Summary statistics
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Table 5 Wage Equations
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Appendix B

See Figs. 4 and 5.

Fig. 4
figure 4

Participation rates

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Fig. 5
figure 5

Weekly hours (if employed)

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Wernhart, G., Winter-Ebmer, R. Do Austrian men and women become more equal? At least in terms of labour supply!. Empirica 39, 45–64 (2012). https://doi.org/10.1007/s10663-010-9154-z

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