Co-author(s): Pamela Medina, Sebastian Sotelo

Abstract: We examine the impact of international trade on labor force participation. Previous research focuses on how trade affects labor demand, either through import competition or new export opportunities. We focus instead on how trade impacts the labor supply (particularly for females), by reducing the price of appliances that substitute for labor in household production. To examine this mechanism, we assemble a detailed data set for Peru consisting of four population censuses, household surveys, and customs records for the period 1983-2017. Using a difference-in-difference strategy, we find that labor force participation increases with a drop in the import price of appliances. The effect is larger for women. To structurally interpret these results, we build an equilibrium model of trade and household production.