Forces that drive women’s labor force participation rates

Interesting:

Goldin: The quiet revolution is a change in how young women perceive the courses their lives are going to take. One of the places we see this is the National Longitudinal Survey, which began in 1968 with women who were between 14 and 24 years old. One of the questions the survey asked was, “What do you think you’re going be doing when you’re 35 years old?” In 1968, young women essentially answered this question as if they were their mothers. They would say, “Well, I’m going to be a homemaker, I’m going to be at home with my kids.” Some did say they would be working in the labor market, but the fraction that said they would be out of the home was much smaller than the fraction that actually did end up working outside the home.

But as these women matured and as successive cohorts were interviewed, their perceptions of their futures, their own aspirations, began to change. And so their expectations when young about being in the labor force began to match their actual participation rates once they were older. That meant these young women could engage in different forms of investment in themselves; they attended college to prepare for a career, not to meet a suitable spouse. College women began to major in subjects that were more investment oriented, like business and biology, rather than consumption oriented, like literature and languages, and they greatly increased their attendance at professional and graduate schools.

EF: What changed in society that allowed this revolution to occur?

Goldin: One of the most important changes was the appearance of reliable, female-controlled birth control. The pill lowered the cost to women of making long-term career investments. Before reliable birth control, a woman faced a nontrivial probability of having her career derailed by an unplanned pregnancy — or she had to pay the penalty of abstinence. The lack of highly reliable birth control also meant a set of institutions developed around dating and sex to create commitment: Couples would “go steady,” then they would get “pinned,” then they would get engaged. If you’re pinned or engaged when you’re 19 or 20 years old, you’re not going to wait until you’re 28 to get married. So a lot of women got married within a year or two of graduating college. That meant women who pursued a career also paid a penalty in the marriage market. But the pill made it possible for women who were “on the pill” to delay marriage, and that, in turn, created a “thicker” marriage market for all women to marry later and further lowered the cost to women of investing in a career.

EF: What happened during previous periods of change in women’s labor force participation?

Goldin: A large fraction of employment in the early 20th century, outside of agriculture, was in manufacturing. And manufacturing jobs were not particularly nice jobs. White-collar jobs in offices greatly expanded in the 1910s and 1920s, but they required one to be literate and possibly numerate, and women who were older at the time would not have had the education to move into those jobs. And so there developed a social norm against married women working. It was OK if you were single, it was often OK if you were an immigrant or African American, but it wasn’t OK if you were an American-born white woman from a reasonable family, especially if you had kids.

New technologies further increased the demand for white-collar workers, and the high school movement produced a huge increase in women’s education during the early decades of the 20th century. More positions were created that were considered “good” jobs, those that young women could start after high school and keep after marriage with far less social stigma.

The income effect and the substitution effect come from a set of preferences. If individual families have more income in a period when there are various constraints on women’s work, they’re going to purchase the leisure and consumption time of the women in the family, and the income effect will be higher. But if well-paying jobs with lower hours and better working conditions open up, then the income effect will decrease and the substitution effect will increase and both will serve to move women into the labor force.

WEB EXCLUSIVE

EF: There are opposing views of how World War II affected women’s labor force participation. Some view it as a watershed moment; others argue the effects were temporary and dissipated once the men came home. Your research suggests the actual story is a bit more complicated.

Goldin: When I first started looking at this question, the problem was that all we had were census data in 10-year intervals. We knew there was a huge increase in labor force participation between 1940 and 1950, but we didn’t quite know whether it was due to something that happened during the 1940s or to something that happened earlier. Much of the increase from 1940 to 1950 was actually for older women, women in their 40s; by 1950 younger women were having lots of kids and their labor force participation rate was fairly flat. But for the group of women in their 40s, we didn’t know whether the increase was an effect of the war or because these women, when younger in the 1920s and 1930s, had received more education and graduated from high school. Maybe they had been clerical and office and sales workers before marriage and family, and then they returned to a heated-up labor market in the 1950s.

I drew on some historical surveys and pieced together a data set that allowed me to follow a group of women over time, and it appeared that the treatment effect of the 1940s was actually quite muted relative to what had been previously believed. The change in women’s labor force participation looked like the result of longer-run changes rather than a direct result of the war.

But I hadn’t truly identified anything causal, and it always bothered me that I didn’t really answer the question properly. Then Daron Acemoglu, David Autor, and David Lyle wrote a very interesting article about female labor supply and wages that used heterogeneity by state in men’s military enlistments. There was substantial heterogeneity because of various deferments and idiosyncrasies in how states and local draft boards came up with the required number of military personnel.

Claudia Olivetti and I refined their data slightly and used it to see how the “shock” of World War II hit women. In particular, we looked at married women, who for several reasons would be more likely to be affected and enter the labor force. One reason is that their family income would be cut when their husbands entered the military. Another is that they likely had fewer responsibilities at home, and their husbands might have been against their working. We looked to see whether women in states with higher enlistment numbers entered the labor force in greater numbers and whether you could see any persistence of that effect in 1960. And we did see some persistence for higher-educated women who had moved into white-collar jobs in the 1940s. Less-educated women were primarily in manufacturing jobs in the 1940s and probably didn’t remain in them after the war either because they weren’t welcome or because they weren’t the type of jobs they really wanted. Overall, the war did have some effect; it wasn’t the breaking of the dam, but it wasn’t as negligible as my earlier paper concluded.