(DP 1979-13) An Analysis of Wife's Labor Force Participation in the Philippines and the Threshold Hypothesis

Vicente B. Paqueo, Edna Angeles

Abstract


This paper analyzes and estimates the effects of income, education, unemployment level, fertility, location of residence and migration on the wife's probability of being employed. The study examines the research problem in relation to a neoclassical model of "new home economics" variety as well as to the idea that among poor families wife's labor supply is governed primarily by the need to attain or maintain s subsistence standard of living. Using logit analysis, the authors confirm earlier findings that below some threshold education the effect of additional schooling is negative, while above it the marginal effect is positive. It is also observed that below some critical level family income (FY*) the coefficients of regional unemployment rate and duration of marriage are positive and the coefficient of urban location, net of the generally negative effect of migration status, is negative. In contrast, beyond FY*, the effects of these variables are insignificant except for urban location. An explanation suggested for these results is that in making labor supply decisions the constraint of keeping income from falling below subsistence is operative among households with husband's income less than FY* but not among those with higher incomes. `

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