Sectoral Changes and the Increase in Women's Labor Force Participation

Abstract

Throughout the second half of the 20th century, women in the U.S. decided to move increasingly into the labor market. This paper investigates the growth of the service sector as an explanation for the increase in women's employment. It develops an economic model that can account for the increase in women's employment and the growth of the service sector at the same time. A growth model with three sectors and a home production technology is constructed in order to quantitatively assess the contribution of sectoral productivity differences to the change in women's employment decision. The model parameters are calibrated to match time allocations in 1950, and sectoral productivities are taken from the data. This model demonstrates that a higher rate of productivity growth in market services compared to home services can account for a large fraction of the observed increase in women's employment from 1950 to 1990.