This dissertation examines the effect of changes in the stock of human capital on
the labor force participation decision of women aged 25-54. Without the option of homebased
work, some women choose to leave the labor market and stay at home temporarily
for family reasons. Working women realize that time out of the labor force could impose
penalties on their work careers. This is because during the break, they do not accumulate
any new human capital while the existing job skills continuously depreciate.
Nowadays, home-based work becomes possible for many jobs because rapid
development in personal computers and advances in information and communications
technology have reduced employers’ cost of offering home-based work arrangements.
Working women can resolve the time conflict between demand for paid work and family
responsibility by working from home. In a previous study, the home-based work
decision depends on the fixed cost of working and potential home production. Women
who are disabled, have small children, or live in rural areas are likely to work from home
because they have high fixed costs of working and high potential home production.
However, none of the existing studies applies the human capital theory of labor supply to
the home-based work decision.
Using data on the female labor force from the Integrated Public Use Microdata
Series (IPUMS) of housing units from the 2000 U.S. Census, I estimate a nested logit
model to examine the effects of expected costs of non-participation, in terms of forgone
earnings, forgone human capital accumulation and human capital depreciation, on
women’s labor force participation decision. I find that, other things being equal, women
aged 25 to 44 who have potentially high human capital accumulation and high human
capital depreciation are likely to stay in the labor force. In the case that the value of their
home time is so high that they choose to stay at home, they prefer to work for pay at
home than to be out of the labor force.