Female Labour Force Participation in Greater Santiago, Chile: 1957-1997. A Synthetic Cohort Analysis

Journal of International Development
J. Int. Dev. 17, 169186 (2005)

Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/jid.1161
FEMALE LABOUR FORCE PARTICIPATION

IN GREATER SANTIAGO, CHILE: 19571997.
A SYNTHETIC COHORT ANALYSIS
DANTE CONTRERAS1*, ESTEBAN PUENTES2 and DAVID BRAVO1
1
Department of Economics, Universidad de Chile, Chile
2
Department of Economics, The University of Chicago, USA
Abstract: By using a synthetic cohort methodology, this paper contributes to the analysis of
the evolution of female labour force participation in Chile over the last forty years. We
decompose the participation rate in terms of age, year and cohort effects. The results of the
estimations show that the age effect significantly explains the participation rate. Cohort
variables are also important, enabling us to identify cohort effects associated with both, the
number of children and the level of schooling of the group. In turn, contemporary variables
are relevant, in particular the cyclical component. All this indicates that the changes in the
participation rate may be due in the first place to increases in the number of women in the age
groups where the participation rate is higher. Secondly, the increase in the participation rate is
due to effects that are associated with different behaviours in the succeeding cohorts of
women; and, finally, contemporary variables seemingly have very small importance.
Copyright # 2005 John Wiley & Sons, Ltd.
INTRODUCTION
Low female labour force participation has been one of the main characteristics of the
Chilean labour market over the last forty years. A noticeable difference between female
participation rates in Chile and OECD, Latin American or Asian countries has been
observed, even when taking into account the different age structure of the population.1 We
also observe that Chilean women exhibit higher educational levels than their counterparts
in other Latin American countries, but the Chilean female participation rate is one of the
lowest in the region.2
*Correspondence to: D. Contreras, Diagonal Paraguay 257, of. 1501. SantiagoChile.

E-mail: dcontrer@econ.uchile.cl
1
This contrasts with the male participation rate that, on the basis of age cohorts, is comparable with Asian and
OECD countries.
2
See Table 1.
170
D. Contreras, E. Puentes and D. Bravo
Available statistics show that Chilean female participation rate increased only slightly
during the period 196080, which is in open contrast with the trends evidenced in
developed countries. Killingworth and Heckman (1986) report that at the beginning of the
eighties female participation rates in the United States and Canada were over 50 per cent,
showing a sustained increase over the previous two decades. According to the International Labour Organization (ILO, 1996) the proportion of women at working age that
participated in the labour force increased from 53 per cent in 1980 to 60 per cent in 1990 in
OECD countries and it is projected to continue increasing over time.
The data for Greater Santiago reveal an increase from 36 per cent in 1982 to nearly
47 per cent in 1997.3 Data from the National Institute of Statistics (INE) at a national level
shows an increase from nearly 28 per cent in 1980 to a figure slightly below 35 per cent in
1995. This effect may be explained by the rapid growth exhibited by the Chilean economy
during this period.4
In addition, there are significant regional differences in the female participation in
Chile. For example, statistics from the 1996 CASEN survey5 exhibit that while female
participation was 36 per cent in 1996 on a nation-wide basis, the figure for the Metropolitan Region was 6 percentage points higher.
Chile currently has a low population growth (below 1.6 per cent during the last ten years
and below 1 per cent from year 2000 on), then long-term economic development may be
restricted unless there is an increase in labour force participation.6 On the other hand, a
partial equilibrium analysis shows that a higher female participation in the poorer half of
the population may have very significant effects in reducing poverty and improving
income distribution.7
This paper attempts to understand the determinants of womens participation behaviour
over time in Chile. This study is interesting for several reasons. First, there are few studies
regarding the dynamics of female participation for a less developed country. Second, Chile
is currently embarked in a rapid economic growth process, after large-scale structural
reforms implemented during the eighties. As a result other Latin American countries are
implementing similar reforms, but we do not know much about the effects of such growth
processes on female participation. Finally, considering the relatively high level of female
educational attainment (by Latin American standards) in Chile and the advanced stage of
fertility transition, this is a very interesting case to examine female participation.
A synthetic cohort approach is used. This strategy is required to control for changes in
the population growth rates over time when no panel data is available. Thus, we take
advantage of a series of household surveys that cover an unusually long time series for a
developing country.
The paper reveals how important the cohort effect is. Women who are thirty years old
have significantly higher participation rates in the nineties than in the sixties (Figure 1).
These effects are statistically significant even after controlling for other factors. The
Greater Santiago represents about 40 per cent of Chilean population and GDP.
Chile has been the most successful economy in Latin America since the mid-eighties, with an average growth
rate of 7 per cent a year.
5
National Socioeconomic Characterization Survey, 1996.
6
See Garca (1995) and Caputo (1997) for additional discussion. If we consider that labour demand increases
without any significant change in labor supply, wage increases may affect the international competitiveness of the
Chilean economy.
7
See Bravo et al. (1999).
4
J. Int. Dev. 17, 169186 (2005)
Female Labour Force Participation
171
Figure 1. Source: Employment and Unemployment Survey of Universidad de Chile. Developed by

the authors.
evidence provides a valuable picture of trends in female participation over a period that
exhibited diverse economic conditions and policies.
This paper is divided into five sections, the first being this introduction. The second
section reviews the empirical evidence. In the third section, we present the evolution of the
female participation rate using the data from the Employment and Unemployment Survey
for Greater Santiago, conducted by the Department of Economics of Universidad de Chile
between 1957 and 1997. The fourth section describes the methodology and results.
Conclusions are found at the end of the paper.
EMPIRICAL EVIDENCE
Female participation has economic and social implications. The behaviour of women in
the labour market has important implications for many other phenomena, including
marriage, fertility, divorce, child labour and malefemale wage differential.8
The increase in participation may be due to cultural changes in the society regarding the
perceptions of womens roles and their relationship with work. This cultural change,
driven by the movements seeking to attain equality between genders, is more developed in
Western countries, where the female participation rate has gradually increased (Killingsworth and Heckman, 1986). However, there has not been sufficient empirical evidence on
the determinants in Latin America where women face additional constraints, including the
expected role of women in domestic labour and child care.
Although the cross-section evidence provides many interesting results, there are many
dynamic aspects of the females decision, which cannot be explored with this kind of
information. In addition, having dynamic evidence is not usual in less developed countries.
Cohort analysis is a useful tool to examine dynamic models when no panel data is
available. Following this strategy, Goldin (1992) uses the census data from 1890 to 1980 in
the United States to build synthetic cohorts and a set of other variables, such as
participation rate, average years of schooling, number of children, etc. Estimations based
For more evidence, see Handbook of Labor Economics, ch. 2.
J. Int. Dev. 17, 169186 (2005)
172
on the cohorts show negative relationships between the number of children and the
participation rate, and positive relations between the schooling of the cohort and its
participation rate. The author finds that the foreign trade sector growth contributed to
female labour market participation. Using the same dynamic strategy, Pencavel (1998)
employ USA data to examine the female labour market between 1975 and 1994. He is
interested in the relationship between working hours (weekly and annual), the participation rate and hourly wage. By using a synthetic cohort model, nine cohorts of women are
constructed using the female year of birth and five educational categories. In addition, the
sample is also divided in single and married women. As a result, a positive relation is
found between hours work and salary. Younger cohorts exhibit greater hours work to wage
elasticities. This elasticity is also higher for younger women (age effect). Finally, married
women also present higher hours work-wage elasticities.
Evidence for LDC, in particular Chile is very limited. Most of the evidence is based on
cross-sectional data. Muchink et al. (1991) estimate the female labour supply using data
from the 1985 Survey on Employment and Unemployment of Universidad de Chile.9 The
authors find a negative relationship between labour supply and the number of preschool
children and family income. This evidence may suggest that females are facing difficulties
in participating in the labour market. Factors such as pre-market discrimination, lack of
social policies oriented to poor household to facilitate participation, such as child care
subsidies, may explain this situation. In addition, they report a positive correlation
between female labour participation and female household headship. This study does
not capture the increase in the female participation rate after 1985. Finally, the effects of
the rapid economic growth of the Chilean economy since the mid eighties was not
examined either.
Pardo (1987) using 30 years of cross-sectional data provides some weak evidence on the
impact of education in increasing the female labour supply. This result is striking
considering that Chile exhibits a relatively higher level of education among women
with respect to other Latin American countries, but lower participation rates.
In a preliminary work, Butelman (1990) uses cohort analysis to examine how the
continuity in the labour market explains the increase in the female participation rate and
reduces the wage gap between males and females.
As we can see, even tough female labour participation and malefemale wage
differential are important issues for LDC, little is known about their main determinants
and consequences. We can hypothesize that education, economic conditions, cultural
factors, aging or discrimination are important factors, which may explain such variation
over time. These elements pose a question on the role of women in labour market and its
consequences. For example, if women are confined to lower productivity jobs, or the wage
differential across gender is significant, then many women may be prevent to participate in
the labour market.10
Alternatively, preferences arising out of biological, historical or social and cultural
factors may be causing low wage and participation. In sum, different factors may be
9
They also included an additional set of questions prepared by the Institution of Nutrition and Technology of the
Department of Farm Economics of Universidad Catolica de Chile.
10
This confinement may be a demand side phenomenon, employers making assumption about womens
behaviour patterns or a supplyside phenomenon, women choosing jobs which allow them to carry out their
domestic responsibilities. This may imply job segregation against female participation.
J. Int. Dev. 17, 169186 (2005)
173
explaining the behaviour of female participation, having different consequences for the
mobilization and utilization of female labour within the productive system, affecting the
efficiency and equity of a society.11 The dynamic analysis presented in this paper provides
some evidence on the changes in the female participation choice. This evidence allows us
to anticipate the future consequences in the labour market and also to know the relative
importance of such factors.
BACKGROUND INFORMATION
Table 1 shows the female participation rate in Latin America. This rate is defined as the
ratio between employed and unemployed females with respect to females in working
age.12 Chile, like Mexico and Costa Rica, belongs to the group of low participation.
Chilean women exhibit a participation only of 47 per cent. On the other hand, Uruguay and
Paraguay are the countries in Latin America with a larger female participation rate
(72 per cent), twenty five points over the Chilean participation rate. These results are
striking considering not only that Chilean women exhibit a relatively high educational
level, as can be seen in Table 1 with the illiteracy rate, which should affect positively
participation decision, but also the sustained economic growth of this economy, which
produces a similar effect.
Table 2 shows the evolution of the participation rate during the twentieth century. The
evidence indicates that the participation rate decreased steadily since 1952, to have
recovery in the last 10 years. On the other hand, male participation rate presents a
stable behaviour between 1907 and 1960 close to 80 per cent. Since then dropped over
time reaching 70 per cent in 2002. The female participation rate shows a fluctuating
pattern. In 1930 it records a 21 per cent; in 1940 reaches 28 per cent, to begin to decrease
and reach 23 per cent in 1970; finally, 32 years after it increases again and reaches
36 per cent.
Table 1.
Country
Argentina
Bolivia
Brazil
Chile
Costa Rica
Ecuador
Mexico
Paraguay
Peru
Uruguay
Venezuela
Participation rate in Latin America
Female participation rate

2545 years old (1996)
60
65
61
47
45
64
44
72
68
72
52
Illiteracy in the population

aged 15 years and over (1990)
4.4
29.9
18.8
6.4
6.1
13.8
15.0
11.7
20.6
3.0
10.8
Source: BID (1999) and ECLAC (2001).
11
For additional discussion about the consequences of female participation see Rubery (1989).
The differences among countries may be explained by differences in the definition, working age, etc. However,
the tendency is illustrative. In Chile the working age for females is defined between 1560 years-old.
12
J. Int. Dev. 17, 169186 (2005)
174

Table 2.
Participation rate
Female population
Male population
Evolution of the participation rate in Chile (percentages)
1930
1940
1952
1960
1970
1982
1992
2002
53
21
87
57
28
88
57
27
88
53
23
85
51
23
80
48
24
73
49
28
72
52
36
70
Source: INE population Censuses. Population considered: Over 15 years old.

Data for 1952 excludes people that are looking for work for the first time.
Table 3.
Female participation rate in Chile and in the Metropolitan

Region (percentages)
Total country
Census 1992
CASEN Survey
1990
1992
1994
1996
Metropolitan region
28.1
34.1
31.7
33.4
34.7
35.6
38.0
39.2
40.7
41.8
Source: CASEN Survey 199098. Census 1992.
The metropolitan region, in which the capital city is located, concentrates 42 per cent of
the economically active population (1992 Census) and 40 per cent of the countrys GDP.
Regardless the source of information, Table 3 put on view that there exist practically 6
percentage points of difference between the female participation rates in Santiago as
compared to the rest of the country. Furthermore, the CASEN data evidences an increase
in the participation rate for Santiago of nearly 4 percentage points in 6 years.
3.1
Data
The study uses information from the Employment and Unemployment Survey conducted
every year by Universidad de Chile since 1957. It is a survey administered to urban
households using a methodology that ensures homogeneity over time. Though it is applied
quarterly, we only use information for June each year, because information on income is
obtained only on this quarter. This is a household survey in which people are asked about
occupation status, earnings, economic sectors, educational attainment, etc. The number of
households varies, but in general goes from 2.100 in the fifties to 2.600 in the nineties. We
are not going to use household observations in our estimations; rather we are going to build
synthetic cohorts, so the number of households interviewed will not have a relationship
with our estimates.
Table 4 shows the female participation rate for different age groups between 1957 and
1997 in Greater Santiago. The table evidences that from 1957 and until 1982 the female
labour force participation remains practically stable; however, since 1982 there is a 10percentage point increase in the participation rate. This increase is more significant in
women over age 24. Furthermore, more than half of the women in the age group 24 to 35
are in the labour force in 1997.
J. Int. Dev. 17, 169186 (2005)
175
Table 4. Female participation rate by age groups Age groups (percentages)

Year
1957
1962
1967
1972
1977
1982
1987
1992
1997
1418 1923 2428 2933 3438 3943 4448 4953 5458

25.9
26.5
23.0
13.5
12.9
10.5
12.0
5.2
8.0
47.5
47.7
47.3
45.4
41.5
43.8
46.5
47.1
45.2
43.4
46.4
45.1
48.7
50.1
50.6
58.5
53.0
62.4
38.5
37.6
42.8
43.3
41.5
43.4
50.1
53.5
55.9
39.3
38.1
38.4
46.7
42.0
44.2
52.5
55.8
52.8
43.4
42.6
39.5
42.0
46.0
41.2
51.8
47.2
59.4
34.3
35.6
33.3
35.4
34.8
41.4
42.6
47.2
56.5
30.7
28.7
33.6
31.0
35.0
36.7
41.4
36.7
50.5
29.8
25.7
25.2
27.0
24.1
22.5
31.3
31.1
37.0
5963 Total
18.5
19.4
17.2
18.0
18.8
13.7
17.0
22.0
34.1
37.1
36.5
36.4
36.1
35.7
36.1
42.1
41.9
46.6
Source: Employment and Unemployment Survey of Universidad de Chile. Developed by authors.
COHORT ANALYSIS
Panel data is the most adequate type of survey to keep track of the characteristic behaviour
of the same people during long periods. Though no such data is available for Chile, a
pseudo-panel is built using data from cohorts. A cohort is defined as a set of people born
in the same period that may be followed-up in time using cross-section surveys.
Accordingly, though it is not possible to keep track of the same woman over time in
order to observe her life behaviour in the labour market, it is possible to follow groups of
women born the same year (which for all statistical purposes belong to the same sample)
and observes how that generation behaves over time. This type of data allows us to capture
the dynamics of labour market behaviour across time, which cannot be appropriately with
cross-section data. The methodology used to build a pseudo panel is described in the
section that follows.
The methodology of synthetic cohort has been widely used. Attanasio (1991) examines
family savings in the United States; Deaton (1997) describes consumption patterns in
Taiwan. Goldin (1990) and Pencavel (1998) use synthetic cohorts to analyse labour market
outcomes in United States.13
To illustrate what the construction of cohort means, we can use the information
provided by Table 3. Women between ages 14 and 18 in 1957 were born between 1939
and 1943; women between ages 19 and 23 in the year 1962 were also born between 1939
and 1943; and in 1997 the women between ages 54 and 58 were born in the same period.
Hence, we have the participation rate for this generation (193943) encompassing age 14
to age 58.
Table 5 (a rearrangement of the figures presented in Table 4) shows 10 generations of
women and their participation rate by age group. Two types of information may be
obtained. First, the life cycle behaviour is examined by following a generation over time.
For instance, if we observe women born between 1944 and 1948, we find that at age 14 to
18 their participation rate was 26.5 per cent. This rate increases until it reaches 48.7 per cent
between ages 24 and 28, but it drops to 41.5 per cent, during the child-rearing period.
Later, this generation begins to recover its participation rate at ages 44 to 48 reaching
51.8 per cent, to then begin to decrease once again.
Second, Table 5 also shows the different behaviour of cohorts. For instance, the
participation rate has been decreasing over time in the group between ages 14 and 18.
13
In Chile, Larranaga and Paredes (1999) have used cohort analysis for human capital models.
J. Int. Dev. 17, 169186 (2005)
176

Table 5. Participation rate by cohorts Age (percentages)
Period
191923
192428
192933
193438
193943
194448
194953
195458
195963
196468
1418 1923 2428 2933 3438
25.9
26.5
23.0
13.5
12.9
10.5
47.5
47.8
47.3
45.4
41.6
43.8
46.5
43.4
46.4
45.1
48.7
50.1
50.6
58.5
53.0
38.6
37.6
42.8
43.3
41.5
43.4
50.1
53.5
55.9
39.3
38.1
38.4
46.7
42.0
44.2
52.3
55.9
52.8
3943 4448 4953 5458 5963

42.6
39.5
42.0
46.0
41.2
51.8
47.2
59.4
33.3
35.4
34.8
41.4
42.6
47.2
56.5
31.0
35.0
36.7
41.4
36.8
50.5
24.1
22.5
31.3
31.1
37.0
13.7
17.0
22.0
34.1
Source: Employment and Unemployment Survey of Universidad de Chile. Developed by the authors.
The participation rate for women born between 1939 and 1943 is 25.9 per cent, while for
women born between 1964 and 1978 this rate is 10.5 per cent at the same age, which may
be explained by the increase in the female educational attainment. If we examine women
older than age 24, we observe that, in general, different cohorts have increased their
participation by age group with respect to the previous ones. For instance, for the group in
ages 39 to 43 we have that the cohort born between 1919 and 1923 had a participation rate
of 42.6 per cent, whereas women born between 1954 and 1959 had a participation rate of
59.4 per cent; the participation rate for that age cohort has increased by 16 percentage
points after 35 years, indicating a cohort effect.
Figure 1 shows the cohort effect more clearly. Six different cohorts show that recent
cohorts tend to increase their participation rate. However, generations can only be
compared during part of their life cycle, since it is not possible to retrieve the information
for all age groups of the different cohorts, given the number of years in which the survey
has been administered.
4.1
Decomposition by Age, Year and Cohort Effects
Following Deaton (1997) the participation rate for a cohort in a specific year can be
decomposed into three effects: age, cohort and year.
The age effect is related to the life-cycle profile of the variable; the cohort effect reflects
trends that bring differences in the positions of the different age profiles; finally, the year
effect captures the effects that exert a simultaneous influence on the age profiles of all the
cohorts. The decomposition that is applied assumes that there is no interaction between the
cohort, age and year effects. For instance, the shape of the profile is not affected by
changes in its position (the age effect is not related to the cohort effect).14
The study of cohorts has some advantages over the use of panel data. Panel data may be
exhausted early (attrition) and, with time, become hardly representative at all. This does
not happen with cohorts, since they are always built on the basis of new cross-section
information. In addition, given the variables are defined by cells; the problem of
measurement error is reduced.15 A problem that may arise when using cohorts is the
14
15
For a detailed discussion see Deaton (1997).

See Deaton (1997).
J. Int. Dev. 17, 169186 (2005)
177
existence of migratory movements that can affect the composition of cohorts. Migration
from rural areas to urban areas may affect the definition of a cohort. However, there is no
information on migration rates that we could use in this study and considering that we use
only urban data this could be an important caveat, because we might not following the
same women during this 40 years.
The age effect shows how the life cycle is related to the participation in the labour
market. A common hypothesis is that women enter in the labour market, then they
interrupt their participation in order to have children and then re-enter the market. Thus, at
an early stage of the life cycle the participation should increase, then reduce and increase
again.
The evidence partially supports this hypothesis. In Figure 2, the age effect shows that
females between 2331 years old reduce their participation in the market explained by the
age effect. Later, from this year to 49 years, the participation fluctuates with no clear trend.
Finally, from this age the participation rate decreases slowly until 60 years old.
On the other hand, the year effect (Figure 3) shows how the participation rate behaves in
the business cycle. There are negative effects in the period 197386, in particular in years
1974, 1975, 1980 and 1982, in which the GNP growth in Santiago was 5.6, 14.7, 7 and
15.8 per cent respectively. A positive relationship is observed between 1993 and 1997.
Thus, the negative effects are associated with economic recession, while the positive effect
with economic expansion. Therefore, we can argue that the female participation rate had a
procyclical behaviour.
The cohort effect presents the differences in the participation rate among different
generations. The evidence indicates that younger women exhibit a higher participation
rate. The cohort effect has grown steadily through generations as is shown in the Figure 4.
This effect is strongest for women born between 1917 and 1959. The following generation
has maintained such effect.16
This result present how important is the cohort effect in forecasting changes in the
participation rate. The use of only one of these effects may generate wrong conclusions.
For example, by using only the age effect and the information of Table 3, we may conclude
that the demographic transition of the Chilean population would imply future reduction in
Figure 2. Source: Employment and Unemployment Survey of Universidad de Chile. Developed by

the authors.
16
For women younger than 23 years old, it was observed a lower participation rate, which may be explained for
the fact that women in such generation are currently more involved in studying rather than working, which may
reverse the cohort effect.
J. Int. Dev. 17, 169186 (2005)
178
Figure 3.
Source: Employment and Unemployment Survey of Universidad de Chile. Developed by

the authors.
Figure 4.
Source: Employment and Unemployment Survey of Universidad de Chile. Developed by

the authors.
the participation rate. However, the cohort effect implies an increase in the participation,
which may offset the age effect. To complement the analysis made with this decomposition the next section uses a multivariate approach.
4.2
Pooled Cross-section, Time-series analysis of female labour participation
In this section we use specific cohort and year variables. The cohort variables, which are
assumed to be explaining participation, are: education, number of children in different age
categories and headship of the household. These variables affect the decision to participate
throughout all the life cycle of women, and therefore they should be compared by
generations. Thus, we take averages over ages in each year. For instance, we take the
participation rate of 25 years old women, their average level of education and their average
number of children and use that in the regressions. Due to some limitations on the
information available in some years we were able to build 1216 cohort observations.
Level of schooling is expected to affect positively the participation rate. This variable is
measured in two different ways. First, the average years of schooling of women in cohort i
in year t. Second, the percentage of women with at least 12 years of education (secondary
J. Int. Dev. 17, 169186 (2005)
179
education). The number of children that women have may be important in considering
their continuity in the labour market and their time allocated to work. The higher the
number of children, the lower the participation is. By assuming that children in different
age affect differently the participation rate, we used three age categories: children below
age 6, between ages 6 and 10 and between ages 11 and 15. The first group includes fiveyear olds, because at age 6 children begin to attend school. Headship of the household
corresponds to the percentage of women within a cohort that considered themselves as
head of the household.
Year variables should affect all of the generations of women in the same year, regardless
of the generation they belong to. For instance, a high economic growth affects all women,
regardless of the year of birth.17 The year variables that we included are: type of
occupation and measures of economic cycle and wages.
The fact that women have higher levels of participation in the labour market is due to
changes not only in labour supply, but also in female labour demand. Some sectors of the
economy clearly demand more female labour than others (for instance, the construction
sector does not usually have a demand for female labour). High economic growth may
account for a higher female participation level. Table 6 summarizes information for the
four most important sectors that concentrate female labour. Services and retail attract more
than half of female workers, and there is also a growing trend that younger women
concentrate more in retail. In 1997, 30 per cent of women between ages 19 and 23 worked
in that sector. Furthermore, the importance of communal and social services as a source of
female labour at all age groups has increased.18
In addition, the macroeconomics setting may influence the female labour participation. Between 1957 and 1997 there have been important economic crises and also long
processes of economic growth, it is necessary to consider them as a determining factor
in the decision to work. One of the variables used to measure economic cycles is the
GDP growth. As the study focuses on the participation rate in Greater Santiago, we will
use the GDP growth rate in the Metropolitan Region; we only have data from 1961 to
1995, which limits the sample size in our estimation. The other variable used to measure
the economic cycle is male unemployment rate between ages 25 and 49. Most of the
men in that age group should be working; hence high levels of unemployment for
individuals in this age category may clearly indicate a downturn in the economic
activity.
Finally, labour market participation depends on the preferences regarding consumption,
leisure and non-labour income available. Within this context, the labour income of the
husband may be considered as non-labour income for women. Table 7 summarizes male
and female hourly wages. This table also provides information on total family income.
Changes in any of the variables described above clearly illustrate the effects of
economic crises. In 1975 and 1983 hourly male and female wage levels decreased
considerably and affected family income. The deep economic crises meant that the
1981 wage levels were only recovered in 1993. However, a sustained GDP growth over the
last eight years caused wages to increase considerably. For instance, monthly family
income increased from US$ 720 in 1989 to US$ 1.120 in 1997.
17
This approach has been previously used by Goldin (1990) and Pencavel (1998) examining female participation
in USA.
18
For instance, primary and secondary teachers, nurses and occupation related to education and health are found
in communal and social services.
J. Int. Dev. 17, 169186 (2005)
180

Table 6.
Percentage of women by economic sector and age group (Greater Santiago)
Age
Sector
1418
Retail
Govern./Financ. Serv.
Serv. Per./com.
Serv. Comu./soc.
Retail
Com./Pers. Serv.
Comm./Soc. Serv.
Retail
Com./Pers. Serv.
Comm./Soc. Serv.
Retail
Com./Pers. Serv.
Comm./Soc. Serv.
Retail
Com./Pers. Serv.
Comm./Soc. Serv.
Retail
Com./Pers. Serv.
Comm./Soc. Serv.
Retail
Com./Pers. Serv.
Comm./Soc. Serv.
Retail
Com./Pers. Serv.
Comm./Soc. Serv.
Retail
Com./Pers. Serv.
Comm./Soc. Serv.
Retail
Com./Pers. Serv.
Comm./Soc. Serv.
1923
2428
2933
3438
3943
4448
4953
5458
5963
1957
1962
1967 1972
6.4
9.8
1.2
67.2
2.9
7.6
3.4
57.0
9.9
15.0
5.2
39.0
18.3
17.4
4.7
39.0
10.5
23.4
9.7
32.5
13.6
27.1
6.45
31.61
12.9
22.7
6.4
29.1
15.5
17.3
1.2
29.6
9.9
21.7
1.7
36.7
10.0
22.6
6.3
0.6
58.5
3.4
12.3
6.0
35.2
13.8
8.4
9.4
31.7
19.1
16.2
4.3
29.1
20.0
18.2
4.4
26.1
15.8
19.6
5.53
30.65
12.06
16.94
5.65
29.84
12.1
17.7
4.42
27.43
16.81
20.3
1.4
29.7
17.6
22.9
2.1
41.7
10.4
49.6
2.4
8.7
1.9
47.6
11.5
13.7
3.7
32.8
15.4
16.3
6.3
27.5
11.9
18.8
3.8
25.0
11.9
13.0
4.3
32.4
18.0
20.7
7.6
27.2
7.6
18.3
1.4
32.4
11.3
25.5
34.0
10.6
13.9
2.8
52.8
2.8
54.8
9.7
1977
1982
1987
7.4
10.4
49.5
3.1
12.3
5.8
38.6
19.1
13.8
7.9
29.0
21.7
14.1
7.7
25.5
25.0
15.8
5.4
25.4
23.3
23.3
5.0
21.0
18.3
21.9
3.9
28.9
15.62
31.1
6.7
18.9
13.3
23.9
4.2
22.5
18.3
14.7
14.7
2.7
72.0
81.5
10.2
9.3
44.1
13.6
13.1
11.2
22.4
21.7
15.1
12.3
22.8
24.2
14.2
12.4
25.4
26.0
17.9
11.6
19.1
21.4
23.0
10.3
27.8
18.3
22.2
6.1
33.3
17.2
25.0
5.4
26.8
21.4
25.0
22.7
11.6
34.3
14.5
17.4
13.0
24.5
22.5
20.7
9.2
27.0
24.1
21.4
13.7
24.2
20.3
18.0
3.6
28.8
25.9
20.2
8.3
24.8
32.1
17.9
7.1
35.7
17.0
30.6
2.0
36.7
10.2
9.1
35.3
5.9
41.7
8.3
59.1
9.1
58.3
6.3
17.6
11.9
37.7
11.1
16.1
11.1
29.2
21.1
17.7
12.4
20.6
28.4
16.2
8.6
23.8
25.7
21.3
12.1
34.5
17.2
12.0
7.0
27.5
19.7
22.1
5.8
29.8
17.3
26.5
6.0
32.5
18.1
38.5
7.7
30.8
3.9
15.5
1992 1997
16.7
5.6
50.0
24.5
13.5
20.7
12.7
18.1
11.7
24.5
21.3
19.2
15.4
18.1
23.5
20.0
10.6
18.7
23.4
17.2
10.7
21.3
23.1
18.0
5.8
23.7
31.4
16.2
11.1
38.4
15.2
22.9
1.2
27.7
24.1
24.0
4.0
40.0
12.0
36.8
13.2
13.2
10.5
30.4
15.9
11.1
15.9
20.9
16.0
18.3
19.3
20.4
16.6
15.5
22.9
19.5
13.8
23.2
28.9
21.8
10.3
20.2
29.2
14.9
10.1
30.3
25.5
20.8
9.7
26.6
19.5
12.4
10.1
36.0
27.0
24.5
4.1
32.7
14.3
Source: Employment and Unemployment Survey of Universidad de Chile. Developed by the authors.
4.2.1 The Econometric Model

The model estimated uses as dependent variable the participation rate Lit , which is defined
as the participation rate of cohort i in year t. The explanatory variables include generation
or cohort variables Cit (vector of generation variables i in year t) and contemporary or year
variables Pt (vector of contemporary variables). Finally, Ait is defined as the age of cohort i
in year t. The model is defined as follow:
Lit hPt ; Cit ; Ait
J. Int. Dev. 17, 169186 (2005)

Table 7.
181
Evolution of wages and income in period 195797. (Dollars of 1997)
Wages per hour males

1957
1963
1969
1975
1981
1983
1989
1993
1995
1997
0.66
0.98
1.26
1.13
2.86
2.05
2.26
2.61
3.37
3.85
Wages per hour females

0.33
0.46
0.62
0.73
1.90
1.46
1.64
2.01
2.40
2.88
Monthly family income

202.12
258.15
368.43
315.51
816.28
563.08
723.27
878.44
1053.49
1121.78
Source: Central Bank.
The decomposition by year, age and cohort effect of the participation rate (Section 4.1)
proved the relevance of these effects on participation rate. However, with the econometric
specification, we can associate the year, age and cohort effect to some particular
characteristics. The age effect is measured by women age and its square. The year effect
is proxied by male and female wages, non-labour income, unemployment rate, GDP for
retail and GDP. Finally, for the cohort effect, we include number of children in three age
categories: children below age 6, children between ages 6 and 10 and children between
ages 11 and 15) and schooling, which is defined in terms of years of schooling and
percentage of women with complete secondary education.19
The decisions to participate in the labour market, have children or continue their
education, are taken jointly, which involves problems of endogeneity of these variables.20
This situation affects the parameter estimation. Following Pencavel (1998) we selected the
sample for women over 23 years old, where most of the females have already finished their
education. A similar problem arises with female wages, since there is simultaneity
between participation and receiving a wage. However, the paper is not focused on solving
the problems of endogeneity associated with the decision to participate, and consequently
the results must be analysed carefully given these problems.
Table 8 shows the econometric results for different specifications. Each model was
estimated using weighted least squares to control for heterocedasticity. The weights were
defined as the number of observation in each cell. In addition, a cohort fixed-effect model
was estimated, which is presented in the last column of Table 8. The objective of this
estimation is to control for unobservable fixed variables at cohort level.
As it is expected, the results of the different specifications indicate that the number of
children is inversely correlated with the female participation rate. However, the children
below age 5, except for the fixed-effect estimation, have no significant effect on female
19
We do not estimate the model with unemployment and rate of growth of GNP due to both variables capture the
business cycle. We also estimate the model using different specifications with education: years of education and
percentage of women with at least secondary education (12 years of schooling).
20
To correctly address the problem of the joint decision among different options might be obtained by looking at
the intra-household decision. However, cohort data is not appropriate to examine this type of models given that
figures are computed using weighted average of different variables. Rubalcava and Contreras (1999) and
Contreras and Caceres (2000) have provide some evidence of the role of within family decision in Chile. This
evidence examines the expenditure allocation among children (first-born and gender) in Chile across family
income.
J. Int. Dev. 17, 169186 (2005)
182
Table 8. Pooled cross-section, time series analysis of female participation (dependent variable:
participation rate of cohort i in year t)
Variables
Constant
OLS specifications
1
0.0609
(0.946)
0.0570
(0.889)
0.0326
(0.518)
0.0629
(0.917)
0.0703
(1.048)
0.1011
(1.497)
0.2230*
(2.957)
0.0036
(0.326)
0.0577*
(6.114)
0.0154
(1.598)
0.0021
(0.192)
0.0568*
(5.983)
0.0185
(1.883)
0.0097
(0.088)
0.0583*
(6.070)
0.0135
(1.401)
0.0032
(0.178)
0.0085
(0.077)
0.0586*
(6.096)
0.0137
(1.422)
0.0096
(0.089)
0.0577*
(5.961)
0.0179
(1.814)
0.2488*
0.2496*
0.0234
(1.866)
0.0559*
(5.497)
0.0065
(0.676)
0.0043
(0.204)
0.2169*
(11.708)
(11.340)
0.0228*
(10.023)
0.0233*
(11.390)
0.0233*
(10.928)
2.0E-05
(1.366)
7.2E-06
(0.817)
2.1E-05*
(2.242)
Cohort Variables
Children under 6 0.0036
(0.330)
Children between 0.0576*
610 years
(6.096)
Children between 0.0152
1115 years
(1.581)
Head of
0.0040
Household
(0.226)
Secondary
0.2452*
Education
(10.256)
Years of
Schooling
Contemporary
Variables
Female wages
1.7E-05
(0.693)
Male wages
9.1E-06
(0.770)
Non labour
Income
Unemployment 0.0666*
rate
(2.506)
GDP Retail
0.0514*
(3.017)
GDP
2.1E-05*
(2.282)
Fixed
effects
5
(6.861)
8.8E-08
(1.948)
0.0687*
(2.622)
0.0486*
(3.074)
9.0E-08
(1.974)
0.0739*
(2.786)
0.0508*
(2.992)
0.0765*
(2.922)
0.0476*
(3.003)
1.9E-09
(0.033)
0.1181*
(3.701)
0.0363*
(2.043)
0.0886*
0.1022*
(2.322)
(2.644)
0.0509
0.0751
(0.780)
(1.133)
Age
0.0249*
0.0251*
0.0260*
0.0245*
0.0247*
0.0259*
0.0176*
(8.537)
(8.575)
(8.781)
(8.413)
(8.489)
(8.743)
(5.302)
Age squared
3.9 1004* 4.0 1004* 4.1 1004* 3.8 1004* 3.8 1004* 4.0 1004* 3.0 1004*
(11.921)
(24.648)
(12.037)
(11.625)
(11.685)
(11.836)
(8.160)
R2
0.7039
0.7038
0.7025
0.7013
0.7012
0.6998
0.6870
# of observations
1216
1216
1216
1216
1216
1216
1216
Robust Testt in parenthesis.

*: significant at 5 per cent : significant at 10 per cent.
participation. The most significant effect in terms of magnitude and statistically significance are children between 610 years old. This result has important policy implications; consider for instance day care centres, for children less than 6 years old, versus
schooling expansion on hours per day, for children above 6. The second policy could
imply higher participation rates for women.
The educational variables are positively correlated with participation. Thus, cohorts
with more years of schooling have significant differences in participation rates as
compared to other cohorts. Although it is well establish that education affect participation
rates, we can establish now its magnitude. A twenty-year-old woman born in 1945 had in
average 7.7 years of education. A woman at the same age born in 1955 had 9.3 years of
schooling. Finally, the same type of women born in 1965 and 1975 exhibited in average
J. Int. Dev. 17, 169186 (2005)
183
10.4 and 11.3 years of education respectively. This implies that this increase in education
(4 years) was correlated with an increase close to 8 percentage points on the participation
rate of that age group.
On the other hand, being head of households has no significant effect on female
participation. Contemporary variables such as GDP growth of retail positively affect the
participation rate by 0.05 to 0.1 percentage points. An unemployment rate of 15 per cent
will reduce the participation rate by nearly 1.2 percentage points. These two elements
mean that the female participation rate is pro-cyclical.
As the participation rate is measured by age groups, it is unlikely that a small number
of women should affect the mean wages received in the labour market, for which reason
the problems of simultaneity between participation and wages would not be that
serious. However, we decided to estimate both, with the female wage and without
the female wage, in order to capture the effect of their inclusion on the rest of the
parameters. As a result of this exercise, female wages are not significant in the
determination of the participation rate. However, male wages are significant in some
specifications, but their impact is very small. This result may be the consequence of
endogeneity, which, given the data, is extremely difficult to control for. Non-labour
income exhibits an effect near to zero.
The fixed-effect estimates are presented in the last column of Table 8. They are similar
to those obtained in the earlier specifications. For instance, categories of children show a
negative effect on participation. Education still has the same effect, even with a similar
size. Non-labour income is not important. Age exhibits a concave profile over the lifecycle. And the cyclical variables, unemployment, GDP and retail GDP provide evidence
supporting procyclical behaviour.
The results of the estimations show that the age of the cohort significantly explains the
participation rate; this result is very similar to that found in the previous decomposition.
Cohort variables are also important, enabling us to identify cohort effects associated both
with the number of children and the level of schooling of the group. In turn, contemporary
variables are relevant, in particular the cyclical component. All this indicates that the
changes in the participation rate may be due in the first place to increases in the number of
women in the age groups where the participation rate is higher. Secondly, the increase in
participation rates are also due to effects that are associated with different behaviours in
the succeeding cohorts of women; and, finally, contemporary variables seemingly have
very small importance.
One possible line of future research is to extend this kind of study for the whole country,
doing that can help to control for migration and changes in rural and urban status, also we
can compare Santiago and the rest of the country. However, to date data limitation does not
allow us to do so yet.
CONCLUSIONS
This paper contributes to our understanding of the female labour force participation in
Santiago, Chile during the last forty years. The paper uses a synthetic cohort approach.
The evidence were obtained by using different specifications based on a sample of a
pooled cross-section, time series data of female participation. The results indicate that the
change in the age group composition of the female population in Chile exerted a strong
influence on the increase in the female participation rate. A second important effect is the
J. Int. Dev. 17, 169186 (2005)
184
cohort to which a women belongs. In terms of participation rate, both variables predict a
small effect on future labour supply. Chilean society is ageing very rapidly; therefore the
potential gains in participation will be limited by this factor.
By examining more deeply the cohort effect, the evidence suggests that there may be a
change in the way in which younger women approach the labour market, reflected by the
impact of children and mainly by schooling. Although it is well establish that education
affects participation rates, that effect is relatively important in comparison to the other
explanatory variables. Indeed, a woman of twenty years old born in 1945 had in average
7.7 years of education. A woman at the same age born in 1975 had 11.3 years of schooling.
This implies that this increase in education was correlated with an increase close to 8
percentage points on the participation rate of that age group.
On the other hand, in spite of relatively higher education rates with respect other Latin
Americans countries; Chilean women exhibit a lower participation level in the labour
market. Policies oriented to increase the educational level of females and the access to
children day-care centres may induce future increases in the participation rate making the
labour market more competitive. The evidence provided in this article helps in the design
of effective policies to increase female participation rates. Consider two alternative
policies. On the one hand the provision of more day care centres for children less than
six years old, versus expanding school hours by one hour per day for children above six.
Our empirical results would indicate that this second policy would affect female
participation rates more than the first.
Currently, the National Service for Women (SERNAM) has been promoting a childcare
subsidy oriented to poor households. According to the results presented in the paper, there
could be a better way to allocate public funding to promote female participation.
We also find that there is a negative relationship between participation and unemployment and a positive relationship between participation and the GDP growth. However,
their magnitude is small and, consequently, variations in these macroeconomic variables
should not affect female participation very strongly in the future.
Future research should be focus in factors associated to participation, which are not
being considered yet, such as cultural factors and migration policies. In the recent
International Social Survey Programme (ISSP, Lehmann, 2003) Chile is ranked 23rd
out of 24 countries in the world with respect to the general attitude to female participation
in the labour market. According to this survey, most Chilean citizen, both male and female
prefer that women concentrate on childcare and domestic work rather than remunerated
work. In addition, migration policies may also be important for a country like Chile. Better
economic condition in comparison with other Latin American countries, and the low
female participation rate, may have an impact on migration from neighbouring countries
in the future.
ACKNOWLEDGEMENTS
We are grateful for the comments of Andrea Butelman, Romulo Chumacero, Alexander
Galetovic, Andres Gomez-Lobo, Claudia Martinez, Patricia Medrano, Evelyn Lehrer,
David McEnzie, Alejandra Mizala, Ricardo Paredes, Tomas Rau, Andrea Repetto,
Claudia Sanhueza and Sergio Urzua to a preliminary draft of this paper. We wish also
thanks to all participants in the workshop at Universidad de Chile and the XXX Latin
American Econometric Society Meeting. The usual disclaimers apply.
J. Int. Dev. 17, 169186 (2005)
185
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J. Int. Dev. 17, 169186 (2005)
186
APPENDIX
Variable description
Participation rate
Children under six years old
Children between 610 years old
Children between 1015 years old
Head of household
Secondary education
Average years of schooling
Female wages
Male wages
Non labour income
GNP Commerce
GNP
Unemployment
Ratios of occupied and unemployed females divide by occupied,

unemployed and inactive females in each age category and each year.
Average number of children under six in the household in age
category and year.
Average number of children between 610 in the household in age
category and year.
Average number of children between 1015 in the household in
age category and year.
Average number of females head of household by age category
and year. Self-reported.
Proportion of females with at least 12 years of schooling, by
age category and year.
Average years of schooling for cohort.
Average female wages in each year.
Average males wages in each year.
Average household income minus female income in each year.
GNP growth rate for Commerce in the Metropolitan region in each year.
GNP growth rate for the Metropolitan region in each year.
Unemployment rate for males between 2549 years olds in each year.
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