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.
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.