Do Austrian Men and Women Become more Equal? At Least in Terms of Labor Supply!

Abstract

Similar to most industrialized countries, female labor supply in Austria has been increasing for the last decades, while labor force participation for men has been constant or even somewhat declining. This working paper - in cooperation with the University of Linz - provides an insight into wage elasticities concerning work participation and weekly hours for Austrian men and women between 1987 and 1999. It presents the almost continuous reduction in the labor supply reactions of married women. While their elasticity was still several times larger at the beginning of the 1980s, they approached rapidly the much less elastic behavior of men. These developments are important for the analysis of deadweight losses of taxation as well as the effects of tax reforms and wage subsidy programs. In this paper we differentiate between married and never-married women; which is very important in explaining labour force participation. As these differences are negligible for men we refrain from this distinction. Labor supply elasticities give an impression about attachment to the labor force; very high elasticities of (married) women have often been interpreted as evidence for low labor force attachment and a traditional family role model: the male bread-winner model where female market participation was considered as supplementary and more volatile. Due to increasing educational attainment of women, developments on the marriage market - lower marriage and higher divorce rates - and most importantly changing social roles and norms, it can be expected that this traditional male-breadwinner model will have considerably lost its importance.