Women, Wealth Effects, and Slow Recoveries
83 Pages Posted: 3 Dec 2018 Last revised: 10 Sep 2021
Date Written: November 2018
Business cycle recoveries have slowed in recent decades. This slowdown comes entirely from female employment: as women’s employment rates converged towards men’s over the course of the past half-century, the growth rate of female employment slowed. But does the slowdown in the growth of female employment rates translate into a slowdown for overall employment rates? The degree to which women “crowd out” men in the labor market is a sufficient statistic for this question. We estimate the extent of crowding out across states, and find that it is small. We then develop a general equilibrium model of the female convergence process featuring home production and show that our cross-sectional crowding out estimate provides a powerful diagnostic statistic for aggregate crowding out. Our model implies that 60-75% of the slowdown in recent business cycle recoveries can be explained by female con-vergence.
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