Mums and the City : Household Labour Supply and Location Choice

This paper examines the interaction between city choice and labour supply decisions in a two-member household. Using data for the United States, I document substantial variation in labour force participation and hours worked across cities, especially among women with children. For this group of women, I uncover a novel stylized fact: unlike childless women and all men, their labour force participation is lower in big cities than in small cities. I build a quantitative spatial model that reproduces the observed differences in labour supply between small and large cities and use it to show that (i) labour supply decisions are affected by the city where the household lives; (ii) households’ preferences for work influence their choice of city. Finally, I use the model to evaluate the importance of spatial frictions on gender gaps in the labour market and the effectiveness of policies aiming at increasing female labour supply