Allocation Inflexibilities, Female Labor Supply, and Housing Assets Accumulation: Are Women Working to Pay the Mortgage?

This article uses data from the 1986 Canadian Family Expenditures Survey to estimate a life-cycle-consistent model of household labor supply and commodity demand that incorporates a mortgage qualification constraint based on earnings. Both the parametric and nonparametric implications of the model suggest that the labor supply of a nontrivial percentage of married women is constrained by mortgage commitments. The results of generalized selectivity models of female labor force participation and labor supply show that the positive effect of a high debt service ratio exceeds the negative effect of young children.