Why is female labor force participation down?

There have been so many blog posts on male labor force participation, it is time to give women some additional coverage.  So Kubota, a job market candidate at Princeton, has an excellent paper on this topic.

Child Care Costs and Stagnating Female Labor Force Participation in the US

The increasing trend of the female labor force participation rate in the United States stopped and turned to a decline in the late 1990s. This paper shows that structural changes in the child care market play a substantial role in influencing female labor force participation. I first provide new estimates of long-term measures of prices and hours of child care using the Survey of Income and Program Participation. Hourly expenditure on child care rose by 40% and hours of daycare used declined by 20%. Next, I build a life-cycle model of married couples that features a menu of child care options that captures important features of reality. The calibrated model predicts that the rise in child care costs leads to a 5% decline in total employment of females, holding all else constant. Finally, this paper provides two hypotheses and their supporting evidence about the causes of rising child care costs: (i) restrictive licensing to home-based child care providers, and (ii) the negative effect of expanded child care subsidies to lower income households on the incentives for those individuals to operate the home-based daycare.

I will be continuing my coverage of interesting job market papers, as more interesting ones come on line.

Addendum: Kevin Drum adds comment.

Comments

Tyler, why are you shilling this cis-hetnormative crap?
For shame!!!!!

Really? Lesbian and gay couples with children certainly face the same challenges.

Or have you yet to realize that the lesbian and gay couples with children exist? Which would really show just how locked you are into a cis-hetnormative framework. Not that there is any reason to be ashamed about that, of course.

LOL at taking the bait

That's true, I asked and all three gay male couples raising children are struggling with these issues.

Also in the news, due to low labor participation rates the number of people seeking unemployment insurance is at 43 year lows.

But population (and thus employment and unemployment) is still going up

"The number of people seeking U.S. unemployment benefits fell to the lowest level since 1973 last week,"...square that circle kevin.

Right! I'm saying thats a good thing--healthy economy--not just indicative of structural changes and a low LFPR

Ah, yes, the key in your last sentence is "not just". So we do have a LFPR, but like the aftermath of the Black Death in the medieval ages, a 'healthy market for labour'. Right, right, carry on.

"...since 1973..." thus, not lower than 1973 in number of people.

Actually it's due to a remarkable paucity of layoffs. Few people getting pink slips = few people applying for benefits.

"the negative effect of expanded child care subsidies to lower income households on the incentives for those individuals to operate the home-based daycare"

Can someone explain what this means? I'm reading it as lower-income households got subsidies for putting their kids in child care which mean they themselves would be less likely to be child care operators.

That appears to be what it's saying. Seems plausible. This could raise childcare prices for low and middle class families which might change their decision about whether or not to use child care.

Personally, my wife made less money than me and child care costs would eat up a lot of her earnings and we feel there is value in her staying home with the kids, so we decided it was better for her to stay home. Plus she can do all the house chores, make food, and generally manage the household. And all of that labor isn't taxed.

And also if other people get subsidies for more formal operations, there would be less demand for home-based daycare services. But I gather mostly that it would be because if they can get child care more easily then they will not already be at home and thus not be selling child care services to others.

Two expenses for young families that have risen significantly since I was young are for (a) child care and (b) tuition. Are subsidies the cause? I'm nearly old, so a lot has changed since I was a young parent and student. What we didn't have were subsidies for either. What we did have was affordable child care and tuition. As to the latter, I attended my state's flagship public university, and tuition, even in the law school, never exceeded $1,000 a year. As for child care, our son attended a licensed child care center, but the weekly cost was less than $40. Of course, professors and child care workers were paid a lot less back then, though probably no less than what they were worth (in the case of the professors, anyway). I don't doubt that many economics professor would like to end tuition subsidies so tuition can return to a more reasonable (and affordable) level, but I'm confident that those same professors don't favor a reduction in their compensation to the levels before the subsidies.

"Are subsidies the cause?"

For child care, I doubt that's much of the reason. Restrictions and regulations have grown substantially over the last 20 years.

Here's an example:
http://childcareawaremn.org/adult-child-ratio

You'll note that child care centers in Minnesota must have 1 worker per 15 school age children. For generations we've had a public education system with a lower ratio than that and the kids are expected to learn in school.

Clearly raising the ratio of workers to children, fundamentally drives the costs up.

Of course, shit happens; but when it happens to children, all Hell breaks loose. When I was a child, I attended public schools, public schools that had relatively small class sizes. I have no idea how many students were in the classrooms in the schools on the west side. That's the advantage of segregation. And the disadvantage. Shit happens, especially when public schools are required to treat black kids just like white kids. It's expensive too.

" Shit happens, especially when public schools are required to treat black kids just like white kids. It’s expensive too."

So, in your mind, black kids are an expensive nuisance.

I'm pretty sure you said that, not whoever is writing under that pseudonym in that post.

Assuming we are talking about minor children, tuition is only a factor if the parents wish to send their children to private schools.

The final breakdown of the iniquitous American system hurts both male and female workers but with disparate impact and long and variable lags.

http://www.theglobeandmail.com/news/world/brazils-colour-bind/article25779474/

black and mixed-race Brazilians continue to earn far less than do white ones: 42.2 per cent less. More than 30 per cent fewer of them finish high school. Black Brazilians die younger, and young black men die at dramatically higher rates, than do white ones, typically victims of violence, often at the hands of police.

Indeed, in many ways the economic and social progress has served only to bring into stark relief how entrenched the hierarchy of race and colour remains. At the last census, in 2010, 51 per cent of Brazilians identified themselves as black or of mixed race. But the halls of power show something else. Of 38 members of the federal cabinet, one is black – the minister for the promotion of racial equality. Of the 381 companies listed on BOVESPA, the country’s stock market, not a single one has a black or mixed-race chief executive officer. Eighty per cent of the National Congress is white. In 2010, a São Paulo think tank analyzed the executive staff of Brazil’s 500 largest companies and found that a mere 0.2 per cent of executives were black, and only 5.1 per cent were of mixed race.

Blacks receive equal pay for equal work. Unfortunately Portugal's oppressive colonial system (which went to the extremes of banning industry and press in Brazilian territory -- compare and contrast with Franklin, scientist, journalist and printer, in Colonial America) and the war against the Castellan savages delayed dramatically the economic development of our Fatherland, which restricted greatly our ability to provide our brothers and sisters (not only Black but White as well) with good education. However, it is worth noticing that Brazil has one of the most radical affirmativa systems and some of the most inclusive social services mankind has ever seen. Education and healthcare are free. Blacks have assured proportional representation at universities and the public service. Brazil has the largest and best cash transfer program of the world. More importantly, there is nothing in Brazilian history like the American Nazist Party, the Ku Klux Klan or Donald Trump. There is nothing like Ferguson or Watts in Brazilian history. There is nothing like Clay or Compton. Brazilian Blacks don't live terrorized by the forces of White Supremacism as in the United States.

The first gereration of women who worked outside the home in large numbers mostly had stay home mothers or mother in laws who could care for their grandchildren. But the current mothers of young children must pay for childcare because the grandmothers are working. That means that only women who can earn a high salary or receive a subsidy will work for financial reasons and the higher the cost of care the fewer mothers work. This is a unintended consequence of the welfare reform in the 1980s that forced welfare mothers into the labor force.

An intended consequence you mean?

What forced them to be welfare mothers?

The concern is that they are no longer available to provide child care for others, not that someone threw them some crumbs a few decades ago.

Also, who forced them to become (mostly single) mothers?

Women are also having children later in life, and grandmothers are unwell or dead.

In many cases they may also have had older children who could care for younger children when the mothers (re)entered the work force. Large families are rare these days and often families cluster their few children together so there is no sister or brother old enough to look after a younger one.

I suppose we could Import more cheap nannies to reduce the cost of outsourcing child care so that more American women can flee their comfortable concentration camps.

I looked at the BLS stats for employment population ratios for women,, 20-24, 25-34, 35-44, 45-54. On cursory inspection, the EP ratios for all these age categories appear to have declined more or less in parallel since 2000. Why would that be, if child care costs are a significant factor here?

The answer is obvious, isn't it?

People having children later? Grandparents taking care of their *practically* orphaned grandchildren?

Think "Asimov".

Interesting.

One would think there'd at least be some survey data on this issue, but I'm consistently surprised by the lack of good information on such things, so I guess I should quit being surprised.

What is exactly the goal we are measuring here? Are we trying to subsidize poor women who got pregnant and need to work? or are we simply assuming that *all* women who want to work should be able to work and therefore we should subsidize the ones who don't make enough money to pay for child care?

These seem to be very different goals, with very different costs associated and data to be analyzed.

I think the general assumption is that the goal is higher economic wellbeing, and that easier access to the labour force for women contributes to total production potential. Anything that gets in the way of women entering the labour force, such as constrained access to child care services, would thus be inconsistent with this goal.

Then again, most people do not make decisions solely on the basis of maximizing income or their production potential, because we're not cogs on wheels.

Back in the Fabulous Fifties, when Ward, June, Wally and the Beaver were the normal American family, Yankees made fun of the godless Commies of the USSR, where all the moms were part of the labor force and their little children spent the day in pre-school socialist education camps. Don't hear much about that anymore.

" where all the moms were part of the labor force and their little children spent the day in pre-school socialist education camps."
Instead of spending the day in K-12 socialist education camps like American older childre, you say? The pot calling the kettle black. Both the Godless Communist system, based on slavery and repression, and the American system, based of fierce exploration of the worker and brutal repression of the minorities, are failed models. There's not a kopek's worth of difference between America and Russia. There never was, there never will be. Both are under Fascist regimes bent on world domination.

Today, most Brazilians of all colours acknowledge that there is racial prejudice and discrimination in the country. Based on the statistical analysis of censuses, surveys and other evidence, we know that racial inequality is high and that racial discrimination in the labour market and other spheres of Brazilian society is common. Non-whites are major victims of human rights abuses, including widespread police violence. On average, black and brown (mulatto or mixed race) Brazilians earn half of the income of the white population. Most notably, the middle class and the elite are almost entirely white, so that Brazil's well-known melting pot only exists among the working class and the poor. Non-white Brazilians were rarely found in the country's top universities, until affirmative action began in 2001.
https://unchronicle.un.org/article/racial-discrimination-and-miscegenation-experience-brazil

You can't reaaly compare a people who has done everything in its power to address the Portuguese exploration did to its more vulnerable citizens with a country like the USA, where racial supremacism and misogeny are a ticket to electoral victory.; You really can't compare the dedication of the Brazilian people to right what was wrong with the country of the American Nazi Party, the Klan, Donald Trump and Hillary Clinton.. Suffices to say, two former Rio de Janeiro governors have been arrested recently by the Federal Police for allegedly having robbed about a half billion dollars (in the USA, as the saying goes you can't put a million dollars in jail or something like that). In the USA, they would be at large, the FBI has become a pretorian guard of the rich and the politically influent. You cannot compare a country that jailed its own citizens based on racial suspecions with a country that even having faced a terrorist campaign by Japanese and Japanese-Americans against its institutions forgave the terrorists and welcome them backinto the fold. You can't compare a country who does its best to address the racial disparities, the mentioned affirmative action one of the tools we have resorted to. You can't compare the country that has never in its history fought a war of conquest with the tormentor of the Phillippines, the guys who rape Japanese schoolgirls and who destroyed Iraq and Syria. You can't compare Brazil with a country where the police kills Blacks just because they are Black. This is how American Blacks die... with thunderous applause.

We will never give you reparations for 1891!

Nothing happened in 1891.

Why then the black bordered pages in your history texts, wherein all children learn to mourn: "A derrota do 1891" ?

It never happened! It is a lie and you know it very well!

This reminds me of a joke that ends, "Who cares?"

I think the joke itself is "How do you give a woman an orgasm?"

(i) restrictive licensing to home-based child care providers, and (ii) the negative effect of expanded child care subsidies to lower income households on the incentives for those individuals to operate the home-based daycare.

Why not throw in decrease of illegal immigration? I know that effects child care California and other Southwest states.

Otherwise, I am on the fence with this issue because increase parent contribution and participation with children under 10 is a good thing. The analysis shows full 40 hours preK education has a slight negative effect on children later education. I assumed that is because it is better for young children to be a home with parents most of the week with moderate pre-school (4 - 6 hours). However, the return to single income families would substantially hurt labor supply and the long run economy. (Throw in the aspect that the most competitive nations have less children today but hurts their economic growth two generations later.)

The abstract does not give the time frame over which childcare prices rose 40%.

I think I can safely assume it was for 1990 to 2010 or 20 years.

That implies childcare rose at a 2% annual rate. That is significantly lower than the CPI or
average hourly earnings grew over that period.

So your thesis is that childcare expenses falling in real terms led to women dropping out of the labor force. Personally,I would have looked for other explanations.

I just checked the CPI for childcare and it roughly agreed with my comment.

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