Real Wage and Employment Uncertainty and the Labor Force Participation Decisions of Married Women

This paper argues that an important factor in a married woman's decision to enter the labor force is the degree of uncertainty associated with expectations offuture wages and (husband's) income, and that high levels of uncertainty during the 1970s may have contributed substantially to the growth in participation in that decade. We apply a model of autoregressive conditional heteroskedasticity to aggregate time series data to measure the level of uncertainty in each period. Our estimates support our hypothesis that the level of uncertainty is an important determinant of labor force participation for married women.