An empirical analysis of women’s working time, and an estimation of female labour supply in Italy

Abstract

Empirical studies show that misspecification of the married (or cohabiting) women’s labour supply equation may produce inefficient wage-elasticity estimates. In order to reduce the variability of these estimates, we suggest a new approach based on instrumental variables given by the economic value of the domestic unpaid-work of women. Using Italian micro-data on time use (ISTAT Survey on Time Use), and applying both a parametric and a semiparametric procedure, we estimate robust wage-elasticity coefficients of married women’s labour supply. Our results suggest that women’s labour supply is negatively influenced by the indirect cost of their informal activity of childcare and domestic work.