Labor supply of married foreign-born women in credit-constrained households

Abstract

In credit-constrained households, some family members who would otherwise not work participate in the labor market. This particular supply of labor, however, is expected to decrease when their families overcome credit constraints. To examine this family investment hypothesis, we develop a test which exploits the dynamic features of the labor supply of married foreign-born women in the United States. Empirical findings, based on the matched March Current Population Survey, are consistent with the hypothesis. This paper also finds that previous results which refute the hypothesis are reversed when the sample is confined to women working in low-skill jobs.