Assessing the "Engines of Liberation": Home Appliances and Female Labor Force Participation

Tiago Cavalcanti
José Tavares, Universidade Nova de Lisboa

Abstract

The recent literature on the macroeconomics of structural change has highlighted the importance of the increase in female labor force participation and its response to the higher availability and declining price of home appliances. This paper uses a unique dataset on the price of home appliances in OECD\ countries to assess its impact on female labor supply. We compare the role of the relative price of appliances to the role of fertility and other macroeconomic factors. We find that a decrease in the relative price of appliances - the ratio of the price of appliances to the consumer price index - leads to a substantial and statistically significant increase in female labor force participation. The quantitative impact of the price of appliances is of the same order of magnitude as that of fertility and robust to the inclusion of the other controls. As to the latter we find that an increase in country income per capita and a decrease in the maximum tax rate on individual income lead to a rise in female labor force participation. As to cyclical factors, periods of low income growth and high male unemployment lead to increases in female labor supply, while higher female unemployment decreases female labor supply. We instrument for the relative price of home appliances to find the results indicate a causal relationship whereby a lower price of appliances leads to an increase in female labor supply.