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Group 15 Presentation Last Version
Group 15 Presentation Last Version
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Introduction
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Introduction
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DESCRIPTIVE ANALYSIS
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Female Labor Participation and the Relative
Price of Home Applicances
⧫ From 1975 to 1999, the relative price index of
appliances tends to decrease over time, and the total
decrease for the period under study is substantial for
all countries.
⧫ Female labor force participation rose dramatically
by about 30%, while the relative prices of home
appliances decreased by around 20 %. In contrast, male
labor force participation remains constant, even
decreasing slightly (figure 1, Panel A).
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Summary Statistics
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INFERENTIAL ANALYSIS
The authors perform two types of analysis.
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Determinants of Female Labor Force Participation –
Ordinary Least Squares Estimation
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Determinants of Female Labor Force Participation –
Instrumental Variables Estimation
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EMPIRICAL RESULTS ON
CORRELATION
⧫ We observe that in models (2) to (9) , the coefficient on the home
appliance price index is negative and statistically significant. The same
applies to the models in columns 8 and 9, in the absence of year
dummies.
⧫ In addition, the R-squared of these models (2) to (9) are very high,
taking values from 0.93 to 0.99.
⧫ Only when year dummies, country dummies, and country-specific
time trends are simultaneously added does the coefficient on the price
of home appliances lose significance, though it maintains its negative
sign (model in column 10).
⧫ The R-squared in column 7 is already at 99% and then only
increases very slightly. This is the reason why the authors focus on
models (3) to (7) .
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EMPIRICAL RESULTS ON
CORRELATION
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EMPIRICAL RESULTS ON
CORRELATION
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EMPIRICAL RESULTS ON
CAUSALITY
⧫ Causality analysis confirms and refines the previous results of the
correlation analysis.
⧫ There is a remarkable consistency of the results in table 3 when
compared with those in table 2.
⧫ Again the relative price of appliances is robustly and negatively
associated with female labor force participation.
⧫ In addition, by instrumenting the relative price index of appliances by
two other variables, the relative price index of manufacture and the
terms of change adjustment, the authors was able to establish a causal
relation with the female labor force participation.
⧫ This causal relation is even stronger than the correlation established
previously.
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EMPIRICAL RESULTS ON
CAUSALITY
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THE BASIC MODEL
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MODELS OF THE CORRELATION
AND ROBUSTNESS ANALYSES
⧫ In their study of the correlation between the variables FLFP and
PAPPLIANCES, the authors consider 10 models which they estimate by
the Ols method. The results are presented in Table 2, page 82.
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⧫ The estimations are all the more robust as they do not change signs
and remain significant when the authors enrich the model by adding
control variables (except for country time trends).
⧫ The authors recall that a correlation, even a very strong one, does
not necessarily mean a causal relation.
⧫ In fact, the relative price index of appliances, used to explain the FLFP,
could itself be explained by the FLFP. This is a problem of endogeneity.
⧫ An increase in the FLFP generates increased demand for household
appliances, which would lead to a drop in the relative price index of
these products.
⧫ The authors identify additional variables to instrument the relative
price index of appliances: the relative price index of manufacture and
the terms of change adjustment.
⧫ The method of instrumental variables is used for the estimation of
the 10 models. This is equivalent to a two-stages least squares method.
⧫ In the first stage, the authors perform Ols regressions of the relative
price index of appliances over the instrumental variables vector
denoted by W in our formulas.
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CAUSALITY ANALYSIS
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CAUSALITY ANALYSIS
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SOME CRITICAL OBSERVATIONS
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THANK YOU FOR YOUR
ATTENTION!
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Reference
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