The labor force participation rates of women have been rising in the United States for more than a century. Significant increases in women’s labor force participation began in the 1970s and continued unabated throughout the 1990s only leveling off and declining slightly in the early years of this century. The causes for women’s entry into the labor force have been a prominent topic of research within the economic literature for more than 40 years focusing on economic, social, as well as technological factors. The rising labor force participation rates of women have been accompanied by greater investment in human capital, especially higher education.
The objectives of this paper are twofold. I first describe the changes in women’s labor force participation and investment in human capital. I then estimate women’s labor force participation and separate the effects of changes in years of schooling (characteristics) from behavioral changes (estimated coefficients).
Data and Methods
I utilize family data files from the Panel Study of Income Dynamics for the years 1995 through 2005. These files contain more than 8,000 records and almost 3,100 variables including occupation, industry, and work histories. These data provide extensive information on the Head of households as well as their Wives/”Wives”. The sample used here consists of “prime age” women, that is, women between the ages of 25 and 54 years (inclusive) who are in the labor force.
To determine how much of the observed changes in labor force participation is associated with changes in characteristics (human capital investment) and changes in behavior, I employ a probit model. Labor force participation is estimated in selected years using a common set of parameter coefficients and with human capital characteristics for each selected year. The deviation of these estimates indicates how much of the observed differences is due to behavior and how much is due to characteristic, specifically human capital investment.
Expected Results
The rising labor force participation of women has many and diverse causes, including social, technological as well as economic. Most notably I expect results to show greater attachment to the labor force due to greater human capital investment. Specifically I expect that deviations from actual and predicted labor force participation rates of prime age women will isolate the effects of one major change in women’s human capital characteristics.
Discussion
The Labor/Leisure choice is one of the most important and significant decisions individuals make during their working life. Given the rising labor force participation of women in general and of prime age women in particular, questions arise concerning the multiple effects of changes in both characteristics and changes in behavior. Empirical analysis can shed light on the role greater human capital investment has played in women’s Labor/Leisure choice and provide a basis for policy recommendations.