Working Paper: CEPR ID: DP13578
Authors: Stefania Albanesi
Abstract: This paper builds a real DSGE model with gender differences in labor supply and productivity. The model is used to assess the impact of changing trends in female labor supply on productivity and TFP growth and aggregate business cycles.We find that the growth in women's labor supply and relative productivity contributed substantially to TFP growth starting from the early 1980s, even if it depressed average labor productivity growth, contributing to the 1970s productivity slowdown. We also show that the lower cyclicality of female hours and their growing share in aggregate hours is able to account for a large fraction of the decline in the cyclicality of aggregate hours during the great moderation, as well as the decline in the correlation between average labor productivity and hours. Finally, we show that the discontinued growth in female labor supply after the 1990s played a substantial role in the jobless recoveries following the 2001 and 2007-2009 recession. Moreover, it also depressed aggregate hours and output growth during the late 1990s and mid 2000s expansions and it reduced male wages. These results suggest that continued growth in female hours since the early 1990s would have significantly improved economic performance in the United States.
Keywords: female employment; business cycles; great moderation; productivity slowdown; jobless recoveries
JEL Codes: E27; E32; E37; J11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| growth in women's labor supply (J29) | TFP growth (O49) |
| relative productivity of women (J49) | TFP growth (O49) |
| growth in women's labor supply (J29) | average labor productivity growth (O49) |
| stagnation of female labor supply growth (J21) | jobless recoveries (J64) |
| jobless recoveries (J64) | aggregate hours (C43) |
| jobless recoveries (J64) | output growth (O40) |
| stagnation of female labor supply growth (J21) | male wages (J31) |
| growth in female hours (J21) | economic performance (P17) |