SMU SOE Seminar Series (April 26, 2024): On the Welfare Cost of Constrained Female Labor Supply

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ABSTRACT Female labor plays a crucial role as a form of consumption insurance for a household facing income risks. However, utilizing this insurance option comes with its own set of costs and constraints. This study delves into how these constraints impact household welfare through two distinct channels: the insurance channel and the precautionary channel. We empirically and analytically show that these constraints not only hinder consumption smoothing but also intensify the household's precautionary behavior before the shock arrival. Furthermore, our quantitative analysis reveals that eliminating constraints on its extensive margin of female labor mitigates precautionary saving, leading to a whopping 14.6\% boost in welfare. On the other hand, relaxing constraints on the intensive margin of female labor allows for more flexible insurance options, leading to a modest 0.23\% increase in welfare. Just a side note: skipping the wedding bells? That’s a major buzzkill, causing a dismal 11.9\% drop in welfare. Click here to view the CV.
		PRESENTER Dongya Koh Osaka University
		RESEARCH FIELDS Macroeconomics Labor Share Dynamics Aggregation of Production Technology Household Consumption Insurance Computational Methods
		DATE: 26 April 2024 (Friday)
		TIME: 4pm - 5.30pm
		VENUE: Meeting Room 5.1, Level 5 School of Economics Singapore Management University 90 Stamford Road Singapore 178903