Evolution of Female Labor Force Participation in the United States: 1967 to 2003

By Brusentsev, Vera | International Advances in Economic Research, August 2006 | Go to article overview

Evolution of Female Labor Force Participation in the United States: 1967 to 2003


Brusentsev, Vera, International Advances in Economic Research


Abstract

This paper describes the changes in the employment choices of prime working-age women from 1967 to 2003. A neoclassical labor market participation model is presented and applied to data from the March Current Population Surveys (CPS). The paper provides a new insight: It highlights the different patterns of labor force participation by family-status categories. Also, the paper introduces the average annual unemployment rate at the state level as an explanatory variable to capture the demand-side constraint of the labor market. The results of the paper support the finding that since 1990, the increase in the participation of women in the labor force has slowed from previous decades. (JEL J00)

Introduction

One of the well-known labor market phenomena of the past five decades has been the increase in the labor force participation of women, particularly married women with children. In 1950, there was a clear division of labor: Men comprised 71 percent of the labor force while 29 percent were women. This changed considerably in the intervening 50 years when women entered the labor market at an unprecedented rate. By the end of the period, three of every five women were working in the labor market or seeking work with the result that women comprised 47 percent of the labor force. (1)

The dramatic increase in female labor supply is well documented in the empirical literature. As surveyed by Blundell and MaCurdy [1999], there have been numerous studies of female labor supply. While a number of investigations have examined changes in female labor supply, less attention has been paid to the changing patterns of labor force participation by family status. In fact, the greatest potential strain between paid work and family commitments occur when there are young children in the family. This study describes the changes in the employment choices of prime working-age women over the last 37 years. The objective is to assess how much change has taken place in the factors that affect the decision to participate in the labor market. Here, the paper provides a new insight: It highlights the different patterns of labor force participation by family-status categories. The changing economic role of women is central to the debate about family values and the well-being of children.

In addition, the paper introduces the average annual unemployment rate at the state level as an explanatory variable to capture demand-side constraints of the labor market. Economic theory posits that labor force participation is determined by the interaction of supply and demand. Labor supply and demand are characterized by individual-specific preferences and the availability of employment. Opportunities are determined by the characteristics of the individual and by social expectations which are influenced by attitudes and institutional constraints.

The paper documents the changes that have occurred in female labor force participation, a prerequisite to any analysis in establishing the extent to which these changes represent compositional shifts or to changes in the factors that directly affect their decisions. The empirical investigation utilizes the data of the March Current Population Surveys (CPS). (2) The next section examines the trends in the labor force participation of women classified by family-status categories. The following sections outline the methodology used in the study and describe the data. Then, identically specified equations are fitted for each year from 1967 to 2003. The last section concludes.

Trends Over Time

How has female labor supply evolved over the last four decades? The March CPS micro data confirm the well-established trend of the past several decades. The steady upward trend in female labor force participation is striking, particularly for highly educated women, married women, and white women.

By making these broad generalization, however, a clear picture of the variation among women at different stages of the family life-cycle is obscured. …

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