International labor market competition and wives’ labor supply responses
Pål Schøne, Marte Strøm
Abstract
We examine how the 2004 European Union (EU) enlargement to Eastern European countries affected the employment, earnings and share of home production among workers employed in the Building and Construction industry and their wives. We use licensing requirements to divide workers into two groups who are more and less exposed to labor market competition. We find that exposed workers experience a fall in labor earnings relative to sheltered workers after the EU enlargement. Increased wife labor supply and earnings compensate around one third of the loss. We do not find a similar change in the division of labor in home production measured by the share of parental leave. Having small children does not constrain the labor market responses of the wives.