Job Market Paper

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The Independent Woman – Locus of Control and Female Labor Force Participation

(last update April 2019)

Abstract Research on female labor force participation has a long tradition in economic research. While many open questions have been answered on the gender gap in labor market participation, the prevalent heterogeneity between women still keeps economists busy. While traditional economic theory attributed unexplained differences in decision-making to idiosyncratic shocks, modern empirical approaches are more and more interested in investigating this psychological black box behind participation decisions. This paper contributes to this research by discussing the role of the personality trait locus of control (LOC), a measure of an individual’s belief about the causal relationship between own behavior and life’s outcomes, for differences in participation probabilities between women. In line with the existing literature, an important role of LOC for independence preferences as well as subjective beliefs about returns to investments are proposed. The connection between LOC and participation decisions is tested using German survey data, finding that internal women are on average more likely to be available for market production and this higher availability also translates into higher employment probabilities. Additional analyses identify a strong heterogeneity of the relationship with respect to underlying monetary constraints and social working norms.