Why Are Married Women Working More? Some Macroeconomic Explanations
Khan, Aubhik, Business Review (Federal Reserve Bank of Philadelphia)
For the past 60 years, the number of hours worked per person in the U.S. has changed very little. Nonetheless, the labor force has undergone some pronounced shifts over that same period. One prominent change is the sharp increase in the number of hours worked by married women. In this article, Aubhik Khan discusses how the composition of the labor force has changed since 1945 and how macroeconomists explain these changes.
Since the Second World War, there has been little overall change in the number of hours worked per person in the United States. Hiding under this apparent constancy lie some pronounced shifts in the composition of the labor force. The share of employment attributable to men and women, to older workers, and to married households has changed, in some instances rather dramatically. How have these shares changed, and what does recent economic research have to say about these compositional changes? (1)
Perhaps the most prominent change in the composition of the labor force has been the sharp rise in the hours worked by married women. Motivated by this rather striking phenomenon, macroeconomists have developed models to explain the asymmetric rise over the past 40 years in weekly hours worked by married women. Three basic changes in the economy likely have contributed to a rise in hours worked by married women (in no particular order of importance): (1) technological progress that has made durable consumer goods more productive; (2) a reduction in the gender wage gap associated with lower pay for women than for men; and (3) a change in social attitudes toward married women working outside the home.
CHANGES IN COMPOSITION OF THE LABOR FORCE
If we ignore differences in the sex, age, or marital status of workers and look at aggregate average hours worked, the number of weekly hours of market work per person has remained roughly constant over the postwar period from 1950 to 2000 (Table 1).2 This is not to suggest that there have not been short-term fluctuations. For example, we know that hours worked per person fall during recessions (as firms' demand for employment decreases) and rise during expansions. However, aside from such cyclical fluctuations, the long-run value changed little between 1950 and 2000: The data indicate that average weekly hours worked per person were 22.34 in 1950 and rose slightly to 23.90 in 2000.
Average weekly hours are, of course, considerably less than the familiar 40-hour workweek, since not all persons are employed. However, the first indication that the aggregate measure hides changes across different groups of workers comes from an examination of the employment to population ratio. Over the same 50 years, this ratio has risen from 0.53 to 0.59. Thus, while five out of 10 people were working in 1950, 50 years later nearly six out of 10 people were employed in the economy. This substantial rise in the employment-to-population ratio and the smaller increase in average weekly hours per person together imply that the hours worked by the typical employed individual have fallen. Indeed, on average, workers worked two fewer hours per week in 2000 then they did in 1950.
Of course, the constancy of average weekly hours per person does not reflect a constancy of earnings. Average real compensation per hour is a common measure of real labor earnings, which includes workers' benefits and controls for the effects of inflation on nominal earnings. Between 1950 and 2000, average real compensation per hour rose more than 150 percent (Figure 1). Thus, while workers are earning much more, the population as a whole is not working more. (3)
[FIGURE 1 OMITTED]
A SIMPLE ECONOMIC MODEL OF THE LABOR-LEISURE TRADEOFF
The constancy of hours worked in light of changes in wages is interesting to economists, as it offers some insight into workers' preferences. To see this, consider the following very primitive model of labor supply sometimes used by macroeconomists. …