Lecture9 - Trends Theory Evolution Quiet Revolution Quiet...

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Unformatted text preview: Trends Theory Evolution Quiet Revolution Quiet Revolution American Economic History University of California, Berkeley Department of Economics September 28, 2010 Econ 113 (UC Berkeley) Lecture 9 9/28/2010 0 / 35 Trends Theory Evolution Quiet Revolution Today's Agenda: Female labor force participation How did female labor force participation change over time? Women were important in the growth of manufacturing and agriculture When did they begin to work more in white collar positions? When did they start and stop being stay-at-home moms? Why did female labor force participation change over time? How did demand and supply affect their evolving labor supply? How are the factors today different from the factors of the past? Econ 113 (UC Berkeley) Lecture 9 9/28/2010 1 / 35 Trends Theory Evolution Quiet Revolution Cross-country: U-shaped trend in female labor supply Source: Goldin (1991). Econ 113 (UC Berkeley) Lecture 9 9/28/2010 2 / 35 Trends Theory Evolution Quiet Revolution ND PROCEEDINGS U.S: flat and right-side of U in 20th century MAY 2006 FIGURE 1. LABOR FORCE PARTICIPATION RATES FOR FEMALES AND MALES BY AGE AND MARITAL STATUS: 1890 TO 2004 Notes: All (2006). Source: Goldin races, marital statuses, and education groups are included unless indicated otherwise. The labor force particEcon 113 rate from 1890 to 1930 is the fraction of "gainful Lecture 9 9/28/2010 ipation (UC Berkeley) 3 / 35 Trends Theory Evolution Quiet Revolution Differences by race and martial status Source: Goldin (1991). Econ 113 (UC Berkeley) Lecture 9 9/28/2010 4 / 35 Trends 185 500 Theory 2000 Evolution 8400 .85 .75 Quiet Revolution 185 U-shaped in developing countries It .s O t .9 8 -a n d rural Thailand ? .7X .65Thailand 45urban r Ind i > S = .6-3 o6 .3- u .2 1_.15185 500 1000 2000 urban India 8400 .? Rc .25 185 5 Annual household per capita expenditure, 1992 US$ Note: x-axis is annual household per capita expenditures, 1992 U.S.$ Source: Mammen and Paxon (2000). Econ 113 (UC Berkeley) Lecture 9 9/28/2010 5 / 35 Trends Theory Evolution Quiet Revolution Why there is not a lecture on male labor supply... "It would not be much of an exaggeration to claim that women gave `birth' to modern labor economics, especially labor supply. Economists need variance to analyze changes in behavioral responses, and women provided an abundance of that. Men, by and large, were not as interesting, since their participation and hours varied far less in cross section [individuals] and over time." -Claudia Goldin, 2006 speech at annual economics conference Econ 113 (UC Berkeley) Lecture 9 9/28/2010 6 / 35 Trends Theory Evolution Quiet Revolution Economics of labor supply Labor supply: how many hours one will work at a given wage How does hours worked change if wages exogenously increased? Time not working is "leisure," which includes household work Income effect: wages income quantity of labor supplied Workers enjoy having more money Leisure is normal good, and quantity of labor supplied decreases Substitution effect: wage leisure more costly labor supplied Workers can take advantage of earning more income Econ 113 (UC Berkeley) Lecture 9 9/28/2010 7 / 35 Trends Theory Evolution Quiet Revolution Labor supply: combining the two effects Wage elasticity: ratio of % change in hours worked to % change in wage Total effect: = s - : total elasticity s : elasticity due to substitution effect : ratio of wife's full-time income to husband's (or family's) income : elasticity due to income effect This equation is calculated from the Slutsky equation Econ 113 (UC Berkeley) Lecture 9 9/28/2010 8 / 35 Trends Theory Evolution Quiet Revolution Shape of the labor supply Elastic labor supply: labor supply responds to well to changes wages Small change in wages produces large change in hours worked Elasticity is greater than 1 Perfectly elastic is when it is infinite (horizontal) Substitution effect is large, income effect is small Inelastic labor supply: supply responds minimally to wages Hours changes very little despite any change in wages Perfectly inelastic if elasticity is 0 (vertical) Large income effect, small substitution effect Econ 113 (UC Berkeley) Lecture 9 9/28/2010 9 / 35 Trends Theory Evolution Quiet Revolution Labor market equilibrium Labor demand: how many hours firms will employ people at a given wage Labor supply: aggregation of individual labor supplies Econ 113 (UC Berkeley) Lecture 9 9/28/2010 10 / 35 Trends Theory Evolution Quiet Revolution Why would female labor force participation increase? 1. Demand increases: sectoral changes increased clerical and sales work capital complementary to female work technological increasing substitutability between male and female labor tastes of employers 2. Supply increases: preferences of workers change consciousness from feminist movement family responsibilities, such as number of children time cost of producing household goods, such as food, cleanliness income of other family members Econ 113 (UC Berkeley) Lecture 9 9/28/2010 11 / 35 Trends Theory Evolution Quiet Revolution Inelastic labor supply 1900: Fraundorf (1979) estimated female labor supply was perfectly inelastic s = 0.26, = 1.32, = 0.2 = 0.26 - (0.2)1.32 = 0 How did labor force participation increase if supply was perfectly inelastic? Only because of labor supply increases Yet, demand spurred high school movement for men and women Labor supply became more elastic over time... Substitution effect increased and income effect decreased Therefore demand changes could change equilibrium Econ 113 (UC Berkeley) Lecture 9 9/28/2010 12 / 35 Trends Theory Evolution Quiet Revolution Income v.s. Substitution Effect Which changes are associated with the income effect v.s. substitution effect? Substitution effect: change in how time can divide between work and leisure Availability of part-time work Rise of household technologies Income effect: change in the value of female leisure relative to work Feminist Movement Stigma changes so that men participate more in household chores Econ 113 (UC Berkeley) Lecture 9 9/28/2010 13 / 35 Trends Theory Evolution Quiet Revolution Timeline Evolution: 1890-mid 1970s Female labor force participation rose, but often intermittently Withdrew for child rearing, and did not plan careers Revolution: mid 1970s-today Planned careers over long time horizon, investing in education Marrying and having children later in life Econ 113 (UC Berkeley) Lecture 9 9/28/2010 14 / 35 Trends Theory Evolution Quiet Revolution Evolution v.s. Revolution Horizon: Do teenage girls perceive lifetime labor force involvement as long and continuous or intermittent and brief? Revolution women pursued careers, not just jobs Identity: Does a woman find individuality in her job or career? Revolution women worked because it was apart of her identity Decision Making: Are labor force decisions made between husband and wife, or does a woman make hers in response to her husband's? Revolution women married once careers and training were underway Career in place, so decisions are made together during Revolution Econ 113 (UC Berkeley) Lecture 9 9/28/2010 15 / 35 Trends Theory Evolution Quiet Revolution Phase I of Evolution: 1890-1930 Independent female worker: some young women worked Stopped working once married, unless family needed two incomes Mostly manufacturing or service sector Supply shifters: rise of education, decreased fertility, changing social norms Income elasticity: large Substitution elasticity: small Labor supply nearly perfectly inelastic any changes due to supply Econ 113 (UC Berkeley) Lecture 9 9/28/2010 16 / 35 Trends Theory Evolution Quiet Revolution Women continued to work in manufacturing, most single Econ 113 (UC Berkeley) Lecture 9 9/28/2010 17 / 35 Trends Theory Evolution Quiet Revolution Phase II: 1930-1950 Easing Constraints for Married Women: female office workers demand Required skill due to use of new office technologies Demand expanded further but briefly when U.S. entered WWII in 1941 Income effect: declined as social stigma improved Substitution effect: increased due to availability of part-time work Electric household technologies (e.g., refrigerator, washing machine) Rise of high schools Supply such that demand could increase labor supply Econ 113 (UC Berkeley) Lecture 9 9/28/2010 18 / 35 Trends Theory Evolution Quiet Revolution Young women work more as office and clerical workers Econ 113 (UC Berkeley) Lecture 9 9/28/2010 19 / 35 Trends Theory Evolution Quiet Revolution Phase III: 1950-1970 Roots of Revolution: "pink collar jobs" as secretaries, nurses, and teachers College was a way for women to meet a spouse Women were secondary earners Income effect: continued its downward trend with improving social stigma Marriage bars lifted: had prevented many firms from hiring married women Sufficiently elastic labor supply enabled it to be demand driven phase Econ 113 (UC Berkeley) Lecture 9 9/28/2010 20 / 35 Trends Theory Evolution Quiet Revolution Women still expected to be stay at home moms Econ 113 (UC Berkeley) Lecture 9 9/28/2010 21 / 35 Trends Theory Evolution Quiet Revolution Economic History through film: Wellesley in the 1950s Teacher: And it says here [student's permanent record] that you're pre-law. What law school are you gonna go to? Student: I hadn't thought about that. After I graduate, I'm getting married. Teacher: And then? Student: And then I'll be married. -Mona Lisa Smile Econ 113 (UC Berkeley) Lecture 9 9/28/2010 22 / 35 Trends Theory Evolution Quiet Revolution Signs of a (quiet) revolution Employment: New expectations of stable attachment to labor force Education: Long investment period in higher education worthwhile Family: Delay in marriage until education is complete Econ 113 (UC Berkeley) Lecture 9 9/28/2010 23 / 35 Trends Theory Evolution Quiet Revolution Rosie reappears: women pursue careers akin to men Econ 113 (UC Berkeley) Lecture 9 9/28/2010 24 / 35 Trends Theory Evolution Quiet Revolution ELY LECTURE Female expectations of employment at age 35 soared 9 FIGURE 2. EMPLOYMENT EXPECTATIONS OF FEMALE YOUTH BY AGE: 1967 TO 1984 Source: Goldin (2006). vidual stated she expected to be in the paid labor force at Econ 113 (UC Berkeley) Lecture 9 Notes: The NLS data are the response to whether an indiage 35 and are given here for white women. The NLS data 9/28/2010 25 / 35 Trends Theory Evolution Quiet Revolution Female college attendance and graduation PAPERS AND PROCE 10 AEA rates soared 27 0.10 26 Female rate minus male rate College Attendance 0.00 College Graduation -0.05 Median age at first marriage 0.05 25 24 23 22 21 20 -0.10 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 Birth year 1930 FIGURE 3. FEMALE MINUS MALE COLLEGE AND GRADUATION RATES: BIRTH COHORTS, ATTENDANCE 1877 TO 1974 Notes: The underlying data are the fraction of four-year Source: Goldin (2006). college attendees or graduates by birth cohort and sex Econ 113 (UC Berkeley) Lecture 9 9/28/2010 FIGU C Notes: 26 / 35 Trends Theory Evolution Quiet Revolution The Homecoming of American College Women: The Reversal of the College Gender Gap 141 Females pursued more math and science courses Figure 5 Male-to-Female Ratio of High School Courses in Math and Science, 1957 to 2000 1.4 Ratio of Male to Female semesters or units 1.3 Math Science Chemistry 1.2 1.1 1 0.9 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 Source: Goldin, Katz, and Kuziemko (2006). Sources: 1957 Wisconsin Longitudinal Survey; 1972 National Longitudinal Survey; 1992 National Educational Longitudinal Survey; and 1982 and 1992 are from U.S. Department of Education (2004, Table 137). Notes: The figure plots the ratio of the mean number of high school courses taken by male graduating Econ 113 (UC Berkeley) Lecture 9 9/28/2010 27 / 35 Trends Theory Evolution Quiet Revolution Females pursued (rigorous) graduating training T. ELY LECT VOL. 96 NO. 2 RICHARD 0.5 Medical Law Dentistry MBA 0.4 Fraction female 0.3 ate lev possib increa possib laws a them. Alte be see 0.1 cernin marrie 0 thems 1955 1965 1975 1985 1995 2005 their n Year of professional school entry 1980s upon FIGURE 5. FRACTION FEMALE AMONG FIRST-YEAR STUDENTS IN PROFESSIONAL PROGRAMS: 1955 TO 2005 had a wome Sources: First-year law students from the American Bar AsSource: Goldin (2006). sociation Web site: http://www.abanet.org/legaled/statistics/ 1970s femstats.html. First-year medical students (to 1994) from 9/28/2010 gradua Econ 113 (UC Berkeley) Lecture 9 28 / 35 0.2 Trends Theory Evolution Quiet Revolution D PROCEEDINGS 27 26 Increasing age at first marriage for all MAY 2006 Some college College graduate Median age at first marriage 25 24 23 22 21 20 1930 1940 1950 Birth year 1960 1970 FIGURE 4. MEDIAN AGE AT FIRST MARRIAGE FOR BIRTH COHORTS OF FEMALE COLLEGE GRADUATES AND ATTENDEES: 1931 TO 1968 BIRTH YEARS Notes: Three-year centered moving averages are shown. Source: Goldin (2006).Population Survey; Fertility and Marital Sources: Current History Supplement, 1990 and 1995. Econ 113 (UC Berkeley) Lecture 9 9/28/2010 29 / 35 Trends Theory Evolution Quiet Revolution Outcome: Female earnings catching up to male T. ELY LECT VOL. 96 NO. 2 RICHARD 80 0.75 75 0.60 70 0.45 65 0.30 60 0.15 55 0.00 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 OF 19 FIGURE 7. WOMEN'S EARNINGS AS A PERCENTAGE MEN'S EARNINGS: 1960 TO 2003 FIGURE Notes: Based on Source: Goldin (2006). median earnings of full-time, year-round Notes: T teachers workers 15 years old and over as of March of the following retaries Econ Before 1989, earnings are for 9civilian workers only. 9/28/2010 Lecture 30 / 35 year.113 (UC Berkeley) Trends Theory Evolution Quiet Revolution Causes of the quiet revolution? 1. FDA approves birth control pill in 1960, and diffuses quickly Women no longer had to choose between relationships and career 2. Divorce laws: 1970s unilateral divorce laws allowed either partner to file Changed household bargaining by empowering women Decreases in the anticipated length of marriage over the life cycle Women anticipated supporting themselves longer Econ 113 (UC Berkeley) Lecture 9 9/28/2010 31 / 35 Trends Theory Evolution Quiet Revolution Birth control use increases over 1960s political economy 736 journal of Source: Goldin and Katz (2002). Fig. 1.--Fraction of college graduate women first taking the pill at various ages (among Econ 113 (UC Berkeley) Lecture 9 9/28/2010 those with no births before age 23). Source: Inter-university Consortium for Political and 32 / 35 Trends Theory Evolution Quiet Revolution Decline in fertility for young adults after pill approved Source: Bailey (2006). Econ 113 (UC Berkeley) Lecture 9 9/28/2010 33 / 35 Trends Theory Evolution Quiet Revolution Unilateral divorce laws rise in 1970s and 80s Figure 2 First Marriages Ending in Divorce, by Year of Marriage Marriage and Divorce and their Driving Forces 31 Proportion of marriages ending in divorce conditional on being married but not widowed .6 .5 1980 89 1970 79 1960 69 .4 .3 1950 59 .2 1990 99 .1 0 0 5 10 15 20 25 Years since wedding Source: Retrospective marital histories recorded in the 2001 Survey of Income and Program Participation. Source: Stevenson and Wolfers (2007). to shocks to the family may both lead even if the parents were to remain married. Additionally, unobserved negative divorce, and to negative outcomes for children, further confounding attempts at causal inference. Econ 113 (UC Berkeley) marriage falling, but exit9through divorce also falling, what has Lecture 9/28/2010 With entry into 34 / 35 Trends Theory Evolution Quiet Revolution Conclusions 1. Female labor supply: U-shaped within U.S., abroad, and across countries In U.S., it declined over 19th century, rose during 20th Increased due to changes in labor demand and more elastic labor supply Women work out of necessity or in progressive and advanced economies 2. After 1970, women pursued careers, and not just intermittent jobs Longer-term educational investments, marry later, delay child birth 3. Quiet revolution sparked, in part, by new contraceptive technology Econ 113 (UC Berkeley) Lecture 9 9/28/2010 35 / 35 ...
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