Changes in Women’s Labor Force Participation: The E¤ect of Changing Returns to Experience¤

Over the past two decades married women’s labor force participation has shown a considerable increase in the US. In particular, both the cross sectional and the life cycle behavior of married women’s hours worked has undergone a substantial change. I show that a key factor underlying this trend is the change in behavior for married women with children. In particular, while in the past married women of childbearing age used to specialize in childrearing and homeproduction activities at the expense of engaging in market work, they now do not curb their labor participation. What gives rise to this change in behavior? In this paper I focus on relative changes in returns to experience as an explanation. In particular, I quantitatively assess the contribution of changes in the return to experience to the change in married women’s life-cycle pro...les of hours worked. I build a lifecycle model with human capital accumulation and home production in which the basic unit of analysis are married couples with children, and calibrate it using data from the 1970s and 1990s. I show that changes in returns to experience can account for a large part of observed changes. I also demonstrate that decreases in the gender wage gap cannot account for much of the change in the shape of life cycle pro...les for women. ¤I thank Richard Rogerson for his encouragement, support and continuing guidance.