Are Spousal Labor Supplies Substitutes? Evidence from the Workweek Reduction Policy in China
Abstract
We estimate the effects of spousal labor supply on individuals’ labor supply by using the 1994-1995 initiation of China’s workweek reduction policy as a natural experiment. We find that a decrease in the labor supply of wives significantly increased the labor supply of husbands, but a decrease in the labor supply of husbands had an insignificantly negative effect on that of their wives. Furthermore, a decrease in the labor supply of one spouse reduced the amount of time spent on housework for both the husband and wife. Our findings of the negative relation between the labor supplies of spouses differ from findings based on data from developed countries. We find evidence that different income levels might be the underlying reason. The findings of this study suggest that more resources are needed to achieve the goals set by governments in developing countries.
