Dynamics of female labor force participation in France

This paper formulates and estimates a structural intertemporal model of labor force participation. Relying on theoretical characterizations derived from an economic model of lifetime behavior, we estimate a dynamic probit model with correlated random effects using longitudinal data to allow for a dynamic structure. The model is applied to a panel of married women drawn from the 1997--2002 French Labor Force surveys in order to represent their participation behavior. It is estimated by maximum simulated likelihood. Our results show that women's decisions to go out to work are characterized by significant state dependence, unobserved heterogeneity, and negative serial correlation in the transitory error component. In addition, we find that the presence of young children in a woman's household reduces her labor participation, but unequally according to their age and number. As expected, educational level has a positive impact on women's participation. Last, a rise in the husband's wage is found to raise female participation initially and to lower it subsequently. This empirical finding suggests that leisure may not systematically be a normal good, contrary to what is frequently assumed in the literature