Outsourcing Household Production: Effects of Foreign Domestic Helpers on Native Labor Supply in Hong Kong

This paper estimates the causal impact of hiring a foreign domestic helper on the labor force participation and occupational choice decisions of native females in Hong Kong. We present cross country evidence comparing Hong Kong and Taiwan that is consistent with the hypothesis that the foreign worker program led to differentially increasing female labor force participation among females with young children. Using cross-sectional data, our IV estimates show that hiring a maid increases the likelihood of working by approximately 20 percentage points. Women with domestic helpers are also more likely to be engaged in occupations that are less flexible and more time intensive. Taken together, these two pieces of evidence suggest that part of the increase in female employment in Hong Kong over the last two decades can be attributed to the foreign domestic helper program, which provided native women with a means of outsourcing household production. ∗We are grateful to David Autor, Marianne Bertrand, Divya Mathur and seminar participants at the University of Hong Kong for numerous helpful comments and suggestions. We are also grateful to the Hong Kong Census and Statistics Department for providing the data and their invaluable assistance.