Academic journal article Economic Inquiry

Women's Rising Market Opportunities and Increased Labor Force Participation

Academic journal article Economic Inquiry

Women's Rising Market Opportunities and Increased Labor Force Participation

Article excerpt

I. INTRODUCTION

This paper examines the secular increase in the labor market activity of married women in the United States from 1975 to 1991. Overall, the female employment rate increased from 49% in 1975 to 67% in 1991. Not surprisingly, the employment gains of married women, the primary focus of this study, largely accounted for this increase.(1) In particular, the employment rate of married women climbed from 44% in 1975 to 64% in 1991.

Analysis of the dramatic increase in female labor force participation is certainly not new. For example, Smith and Ward [1985] document the time series growth in female labor force participation from the beginning of this century to 1980. Goldin's work [1977, 1989] stresses that women's role in the labor market began changing well before World War II. Most broad based studies of female labor force participation end their analyses around 1980; thus, this research updates earlier work and provides a glimpse of what happened to women during the 1980s. More importantly, the present research places special emphasis on the degree of married women's attachment to the labor force. Conventional wisdom suggests that women, particularly married women or women with children, are not as productive or as attached to their jobs as their male or other female counterparts. My findings combat this view and demonstrate a strengthening in married female labor force attachment over the period studied regardless of children's presence.(2)

This paper finds that the fraction of the married female population who worked a full year significantly increased from the 1977-1981 time period to the 1987-1991 time period. This coincided with a decrease (of equal magnitude) in the fraction who did not work at all during the calendar year. Moreover, although the absolute number of married women who work part-time has increased in prevalence, their representation among the population of working married women has declined. In fact, the fraction of married women who work part-time has increased only among those who work part of the year, a shrinking category of women.

Even more interesting, this study shows that the increase in married female employment from 1975 to 1991 stems primarily from a substantial decline in their exit rates from employment. This holds for the sub-population of married women with young children as well. These results suggest that an increase in the duration of married women's employment spells was the most significant contributor to the increase in their employment rates over this time period.

Not only did married women's employment increase but so did their wages during the period studied. However, the wages of higher and lesser skilled women diverged, a story that has already become familiar for men. In the case of women, the higher skilled have made significant wage gains while the wages of the least skilled have stagnated. With this in mind, this research links women's employment increases to their changing market opportunities. The findings suggest that women work more primarily because of their willingness to work more at the same wage (supply shift) and not because of their rising potential wage (demand shift).(3) In fact, less than 15% of the increase in employment can be explained by rising wages regardless of skill category. I interpret these results to reinforce the hypothesis of increased labor market attachment among married women.

The remainder of this paper is organized as follows. Section II describes the Current Population Survey (CPS) data set used for the empirical work. Section III documents the secular increase in married women's labor market participation from 1975 to 1991. In particular, the employment increase for married women is disaggregated by race, presence of children, education group and own skill group. Section IV disentangles the effects of women who work more because of their rising potential wage from the effects of women who work more at the same wage because of either a possible decline in their non-market opportunities or changes in behavior arising from possible changes in preferences. …

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