HOME APPLIANCES AND

FEMALE LABOR FORCE

PARTICIPATION

Tiago V. de V. Cavalcanti and José Tavares

The MIT Press, Feb. 2008

By Brehima Koumare, Despoina Tsakiridou, Habib Khelifi,

Mohamed Ahmed Metwally Elmadbouh, Zildete Landim
Crausaz (Group 15)

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 Introduction

We consider the article by Tiago V. and José Tavares (2008) , which is

part of the microeconomic literature on the determinants of female
labor force participation. Several conventional explanatory variables
have been pointed to as the root cause of increased female
participation in this literature.

⧫ Cultural and social changes variables, such as the decrease in fertility

rates, the degree of urbanization of a country;

⧫ Economic and cyclical variables: government spending's, GDP, and

wage increase;

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 Introduction

But in the 1998 article, “Blau argues, there is a substantial portion of

the increase in female labor supply, that is not explained by variables
that are conventionally used in empirical works.”
⧫ Greenwood, Seshadri, and Yorukoglu (2005) hypothesis: the
emergence of cheap, durable goods that perform household tasks
facilitates the integration of women into the labor force.
⧫ There is, therefore, a room for investigations aimed at identifying
new determinants. And this is the object of the article by Tiago V. and
José Tavares (2008).
⧫ This articles studies the impact of technological progress, the
availability, and the decrease in relative prices of household appliances
on the female labor force participation.
⧫ The study covers 17 countries over the period from 1975 to 1999.

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 DESCRIPTIVE ANALYSIS

⧫ The availability of home utilities such as electricity, flush toilet, and

central heating rised from under 20% to more than 80% of US
households from 1920 to 1970.
⧫ The investment of households in home appliances and their
accumulated stock in percentage of GDP is almost doubled between
1955 and 1990.
⧫ Technological progress in home appliances implies the saving of time
and the substitution of labor for durable goods.
⧫ In the postwar period, people working at home decreased by a
factor of three while average weekly hours worked at home fell from
60 to 20 hours.

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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

⧫ Table 1, page 84, gives summary statistics of quantitative economic variables.

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 INFERENTIAL ANALYSIS
The authors perform two types of analysis.

⧫ Correlation analyzes, based on regression models in which the

relative price index of household appliances is taken into account as
such, as an explanatory variable (table 2, page 85);

⧫ Causality analysis is based on regression models in which two other

variables instrument the relative price index of household appliances:
the relative manufacturing price index and the terms of trade
adjustments (table 3, page 86).

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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.

⧫ The models differ depending on whether or not they contain one or

the other of the following variables: average male income, growth of
real GDP, government spending as a share of GDP, and the share of the
urban population.

⧫ The models also differ depending on whether or not the authors

have added dummies among the following: Country dummies, Year
dummies, Country time trends.

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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).

⧫ Of the 10 specifications considered, the selection procedure would

retain the models (3) to (7) for the correlation analysis.
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 CAUSALITY ANALYSIS

⧫ 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
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denoted by W in our formulas.
CAUSALITY ANALYSIS

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CAUSALITY ANALYSIS

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 SOME CRITICAL OBSERVATIONS

⧫ The choice of models made by the authors is our main point of

criticism.
⧫ In In their interpretations of the results, they used the elasticity
parameter of the FLFP with respect to the variable PAPPLIANCES to
measure the latter’s impact on the former. But the models they have
chosen do not provide direct estimators for the elasticity parameter.
⧫ They were then forced to make indirect and very approximate
calculations of this parameter, providing estimates that do not
necessarily include qualities usually required of estimators.
⧫ In order to have better estimators of the elasticity parameter, the
authors could have applied the logarithmic transformation to the
variables FLFP and PAPPLIANCES, in each of the 10 models considered.

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THANK YOU FOR YOUR
ATTETION!

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 Reference

Ø Assessing the "Engines of Liberation": Home

Appliances and Female Labor Force Participation
Ø Author(s): Tiago V. de V. Cavalcanti and José
Tavares

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