Chapter 6 Women at Work Outline of Chapter: 1) Review employment trends. 2) Discuss various reasons for observed trends. 3) Note current employment differences by education, etc. Key terms: –Employment –Unemployment –Labor force participation (LFP) –LFPR. –Measured with CPS.

Review Employment Trends Table 1: –LFPR by sex and race (U.S. in year 2000). –Shows breakdown for entire population, then prime-aged workers (to exclude students and retirees). Supplemental Figure 1: –LFPR over time for men and women. –Note  for men and  for women – Men Women –1950: 86% 34% –2001: 74% 60%

Further Details Concerning Female LFP Figure 2: –Female LFP by marital status over time. Married Single % 44% % 68% Other persisting differences: –Ex., married women more likely to work part-time than single women. Table 2: Female LFP over time for selected countries. –See Supplemental Figure 3.8. –Usefulness of int’l comparisons.

Women’s Work Over the Lifecycle Supplemental Figure 3.7: –Age-participation profiles for years 1940, 1960, and –Each separate year’s profile: a snapshot of data, so not following the same person over time. –To note: change in LFP at peak- childbearing years. Lifecycle patterns by birth cohorts: (whites only). –Research by Claudia Goldin. –Plots same birth cohort over a lifetime. –Helps to explain relatively low wages for older working women (limited experience).

Notes From Goldin’s Research on Lifecycle Employment Patterns Compiled data from U.S. decennial censuses to construct 6 birth cohorts –Follow a single cohort across each row. Youngest age range: –Huge difference by marital status; –Implies nearly all women drop out of LF upon marriage; –Difference slowly falls as move to more recent cohorts (comparing 1 st 2 columns) First cohort: –See birth years: –Very low LFP all periods, even when children probably grown up.

More Using Goldin’s Birth Cohorts To notice: –1) 2 nd cohort: noticeable  LFP after age 45; still only about 1/5 working. –2) 3 rd cohort: 1 st time get big  LFP starting age 35 (17% to 25%). –3) 3 rd and 4 th cohort: noticeable  LFP starting age 25. –4) 5 th cohort: More young working, interpreted as less LF withdrawal at marriage, more at pregnancy. Little change between first two periods due to baby boom. Big  LFP at each age range. Now over half of older women work. –5) 6 th cohort: now LFP for married young is 75% of LFP for single young.

Major Trends for Shown Cohorts Major trends: –Early on, LF withdrawal at marriage; near-permanent end to paid work. –Later, some LF withdrawal delayed till pregnancy; still most never work again. –At end: LF withdrawal at pregnancy but more return as kids age. –Relate back to Supplemental Figure 3.7.

Implications for Wage Comparisons Important implication for comparing wages across sex: –Consider which cohorts included in wage averages. If have individuals from earlier cohorts, they are likely to have little work experience throughout their lifetimes so will have lower wages. Implies that some of wage gap will go away once the earlier cohorts age their way out of the data, leaving more and more female workers with full (or nearly full) lifetime work histories.

Historical Experience of College Women Research by Goldin: –amily and work experiences of college- educated throughout 1 st half of 20 th century. For that 1 st birth cohort: –For both men and women, college rare around year 1900 –For women: very rare to combine work and family. –1/3 of women who went to college never married. –Nearly half never had kids (including ¼ who did marry). –Occupations: 60% school teachers.

More on College and Work Trends As move forward by cohort: college-educated women more and more likely to marry and have kids. From then to now: –First choice was work or family. –Then choice was work and family. –Now with so many more college- educated women, choice is career then family.

Economic Model of Paid Hours/Employment Original model: –Modeled choice between paid work and leisure. Model set up: –Fixed total number of hours that individual chooses to divide between work and leisure. –Factors that affect decision include own preferences for work vs leisure, market wage, and nonlabor income. –Model assumes individual’s goal is to maximize utility. –Individual has no influence on market wage (W same for each hour worked).

More on Economic Model of Work Marginal decision-making: –Actually two margins: Hours of work; Yes work/no work. Hours choice easier to understand: –Question: Should I  work hours by 1 (and therefore  leisure by 1)? –Answer: I will  work by 1 hour as long as the market values my time more than I do. Market time valuation: wage Leisure time valuation: How I am willing to trade off work/leisure.

More on Original Model of Work Both time valuations measured on the margin: for extra hour. –MVT M = wage = change in utility from  paid work by one hour. MU M no  as M  or . –MVT L = change in utility from  leisure by one hour. MU L  as L  Formal Rule: –Keep  work by one hour as long as MVT M  MVT L. Utility maximizaton : –I.e., best choice about work/leisure. –MVT M = MVT L for last work hour added.

Modifying the original model Problem with the model: only allows for two uses of time: paid work or leisure. In reality, 3 choices: paid work, home (unpaid) work, leisure. Influx of women into labor market led to expansion of model. So now each of the three choices has its own marginal valuation: –MVT M = MU M –MVT L = MU L –MVT H = MU H: MU H  as H hours .

More on Expanded Work Theory Whenever  work by 1 hour: –Individual is  leisure by 1 hour and  unpaid home work time by one hour. –To restate: when  M:  L so  MU L ;  H so  MU H.