Raymo, James, and So-jung Lim
Working paper no. 2007-15
In this paper, we examine educational differentials in married women’s attachment to the labor force in Japan. Using ten waves of data from a nationally representative survey, we estimate discrete-time multi-state hazard models of labor force participation to evaluate the role of incentives to remain in the labor force, incentives to remain out of the labor force, husbands’ characteristics, living arrangements, and a measure of work orientation. Importantly, the estimation of simultaneous hazards for labor force exit and entry allows us to make inferences about theoretically relevant, but unobserved, attitudinal heterogeneity. Our central finding is that university graduates are more likely to both remain in and out of the labor force. The relatively low likelihood of exit reflects educational differences in occupational characteristics but the relatively low likelihood of reentry remains unexplained after controlling for a wide range of individual and family characteristics. These results, in combination with strong positive correlation in the unobserved components of equations for labor force exit and entry, point to the importance of opportunity costs associated with career interruption as well as unobserved differences in orientations toward work and family.