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.

No description available.