Careers or Stop Gap Work? Panel Data Analysis of Wives’ Labour Supply Choices in Spain

Acknowledgments I thank my Ph.D. supervisor Professor John Micklewright, Professor Robert Waldmann for useful and interesting comments, and Goetz Rowher for technical advise and help using his statistical package TDA. I thank IGIER at Milan and the European University Institute at Florence for providing me with the best working conditions for the development of this research. All errors are mine. Abstract I include the variables wives' age and cohort and children in a participation equation to explore how the following two economic issues affect participation. First, a structural change in terms of participation over the life-cycle. Because a structural change does not affect all women of the young cohorts, I distinguish between long-run participating women (i.e. those whose participation behaviour resembles that found after the structural change) and a priori inactive women (i.e. those with a traditional behaviour). Second, it explores the impact of current social policies on mothers' participation. Despite that a negative correlation between children and mothers' participation (especially pre-scholars) is considered a stylized fact in the literature, long-run participating women may not withdraw from the labour market after maternity to avoid the likely experience loss (i.e. real wage decline) due to long absences. This analysis is carryed out by exploiting a longitudinal Spanish survey (the ECPF). Despite some lacking variables, the use of panel data methods yields to satisfactory results.