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Labor Force Supply Decisions of Rural Low-Income Mothers

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Abstract

Employment is crucial to the economic well-being of families. Using a multi-state sample of 412 rural low-income mothers, our study identifies factors influencing two employment decisions they make: labor force entry and number of hours supplied. A logistic regression model correctly predicted 80% of mothers’ work participation decisions. Employed mothers were older, better educated, and less likely to suffer from depression; as well as, more likely to have a driver’s license and receive child care assistance and the Earned Income Tax Credit. An estimated labor supply function explained 33% of the variation in hours worked by the 208 employed rural mothers. Higher wages, availability of health insurance, and overtime benefits predicted the number of hours they were willing to work.

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Notes

  1. Economic theory has settled on referring to “non-market time” as “leisure.”

  2. However, it is more realistic to assume a mother gains a more sizeable increment. Suppose, for example, she were to gain an additional $100 in monthly TANF payments; her odds ratio would be 0.54, meaning the odds of her working after receiving the additional $100 would be 54% of the odds of working without the extra $100 per month (the odds would be 46% lower).

  3. If wage were to be jointly endogenous, or a random regressor correlated with the disturbances of the hours worked equation, then the parameter estimates could be inconsistent. A Hausman specification test was conducted. We concluded from the chi-square test statistic (\( \chi_{20}^{2}=0.26 \)) that an instrumental variable approach was not necessary.

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Acknowledgments

This research was supported in part by USDA/CSREES/NRICGP Grant Number 2001-35401-10215 & 2002-35401-11591, 2004-35401-14938. Data were collected in conjunction with the cooperative multi-state research project, NC-223/NC-1011, “Rural Low–Income Families: Monitoring Their Well-being and Functioning in the Context of Welfare Reform.” Cooperating states are California, Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Nebraska, New Hampshire, New York, Ohio, and Oregon. The authors gratefully acknowledge the assistance of Megan Dolan, graduate research assistant, Peter St. Marie and Thomas Martin, undergraduate research assistants, all at the University of Massachusetts Amherst.

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  1. Department of Resource Economics, University of Massachusetts Amherst, 303 Stockbridge Hall, Amherst, MA, 01003, USA

    Sheila Mammen

  2. Department of Resource Economics, University of Massachusetts Amherst, 211 Stockbridge Hall, Amherst, MA, 01003, USA

    Daniel Lass

  3. Department of Consumer Sciences, Ohio State University, 265 Campbell Hall, Columbus, OH, 43210, USA

    Sharon B. Seiling

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Mammen, S., Lass, D. & Seiling, S.B. Labor Force Supply Decisions of Rural Low-Income Mothers. J Fam Econ Iss 30, 67–79 (2009). https://doi.org/10.1007/s10834-008-9136-5

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