Female Labor Supply in Latin America and the Business Cycle: Instability and Asymmetry

Abstract

This study measures the responsiveness of female labor supply at the extensive margin to business cycle changes in Latin America. The results provide new evidence on the stability and cyclical asymmetry of the traditional added and discouraged worker effects (i.e., AWE and DWE, respectively). It is shown that these effects are not stable and react differently to business cycle variations and even strengthen from a certain threshold. The estimated cross-country and through-time differences in the AWE and DWE, and in their counterparts in the expansionary cyclical phases, that is, the subtracted and encouraged worker effects (i.e., SWE and EWE, respectively) have direct implications for the design of economic policies, particularly those aiming at reducing gender differences in labor force participation in a region in which female workers are still underrepresented.