What determines women's labor supply? The role of home productivity and social norms

Abstract

Abstract We highlight the role of home productivity and social norms in explaining the gender gap in labor force participation (LFP), and the non-monotonic relationship of women's LFP with their education in India. We construct a model of couples’ time allocation decisions allowing for both market and home productivity to improve with own education. Incorporating individual preference to produce a minimum level of the home good due to social norms, we show that our theoretical model can closely replicate the U-shaped relationship between women's education and their labor supply. Our analysis suggests that home productivity, along with social benchmarks on couples’ time allocation to home good, can be critical determinants of women's labor supply in developing countries.