Cost of living and labor force participation: Married women in urban labor markets

I present and test the hypothesis that the cost of living (COL) positively influences the labor force participation (LFP) of married women. Based on housing values and regional variables, I first predict COL for a sample of 150 metropolitan statistical areas (MSAs) using a smaller subsample for which geographically comparable family budget data are available for 1980. Results from estimating a logistic LFP model using census MSA data confirm my hypothesis and suggest that COL embodies locality-specific amenities rather than “pure” prices. Part of the research for this paper was conducted while the author was Visiting Associate Professor at the Department of Economics and the Frederick Douglass Institute, University of Rochester, New York, during 1992–1993. The author thanks Oded Izraeli and Kevin J. Murphy for their helpful comments on earlier drafts and gratefully acknowledges the grant support of the Oakland University Research Committee.