Married Women’s Participation Choices and Productivity Differentials: Evidence from Urban Turkey

A factor that complicates female labor supply analyses is the variety of ways in which women engage in productive work. Besides wage labor these include ‘home’ work (nonparticipation), work without pay in a family enterprise, and paid work on one’s own account. We combine the last two (as self-employed) but treat unemployment as a fourth distinct state, and examine the participation choices of prime age (20-54) married women whose husbands are employed. We use 1988 household data from urban Turkey and control for regional labor market effects by including province level variables. Results reveal striking observed and unobserved differences between the subsamples. We compare the predicted market wage distributions (after accounting for unobserved heterogeneity) and find that the wage labor option attracts the best workers in terms of observed productivity traits. When unobserved productivity traits are priced, it is the self-employed that have the highest productivity. The unemployed have higher (potential) productivity than non-participants.