Family Responsibilities and the Labor Supply of Skilled Native Women

We investigate the effect of immigration on the labor supply of skilled native women. We present a simple time-use model that predicts that a reduction in the price of household services (such as child rearing, cooking or cleaning) should lead to an increase in the labor supply of skilled women with family responsibilities (such as caring for young children, elderly dependents, or a retired husband), relative to skilled women without such responsibilities. We test this prediction using data on Spain’s large recent immigration wave. Methodologically we adopt a spatial correlations approach and instrument for current immigration using ethnic networks established in the past. First, we show that recent female immigration into a region increases the local availability of household services in that region and reduces their price. Second, our IV estimates suggest that immigration may have accounted for one third of the large increase in the employment rates of college-educated women with family responsibilities. In particular, it allowed them to return to work earlier after childbirth, to continue working while caring for male elderly dependents, and to postpone their own retirement when their husbands retire. Third, we also make a methodological contribution with important policy implications. We show that by using some population registry data is feasible to conduct the analysis using the quarterly labor force survey, as opposed to having to rely on the decennial Census.