The determinants of female labour supply in Hungary

Abstract

The aim of this paper is to closely examine the effect on a married woman’s labour supply decision of non‐labour income and of her own wage rate in a transition economy. The paper first shows that labour force participation rates for Hungarian females, though decreasing, were still extremely high and comparable to male economic activity in western countries. It then estimates labour supply parameters using a model that controls for sample selection issues associated with the labour supply of married women. Wage elasticity is estimated to be high and positive (1.81) while the income effect is consistent with leisure being a normal good. No sample selection bias is found.