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Changing Business Cycles: The Role of Women’s Employment

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  • Stefania Albanesi

Abstract

Women’s labor force participation rose rapidly in the post-war period in the United States until the mid-1990s when it flattened out. I examine the impact of this change in trend in female labor supply on aggregate business cycles both empirically and with a quantitative real business cycle model that incorporates gender differences. I show that the rise in women’s participation played a substantial role in the Great Moderation, and not allowing for gender differences leads to incorrect inference on the sources of this phenomenon. I also show that the discontinued growth in female labor supply starting in the 1990s played a substantial role in the jobless recoveries following the 1990-1991, 2001 and 2007-2009 recessions. Moreover, it reduced aggregate hours and output growth during the late 1990s and mid 2000s expansions. I also find that the growth in women’s employment added substantially to TFP growth. These results suggest that continued sustained growth in women’s employment after the early 1990s would have significantly improved economic performance in the United States.

Suggested Citation

  • Stefania Albanesi, 2025. "Changing Business Cycles: The Role of Women’s Employment," Opportunity and Inclusive Growth Institute Working Papers 109, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmoi:99403
    DOI: 10.21034/iwp.109
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    References listed on IDEAS

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    1. Erica L. Groshen & Simon M. Potter, 2003. "Has structural change contributed to a jobless recovery?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 9(Aug).
    2. Kathrin Ellieroth, 2019. "Spousal Insurance, Precautionary Labor Supply, and the Business Cycle - A Quantitative Analysis," 2019 Meeting Papers 1134, Society for Economic Dynamics.
    3. Richard Blundell & Luigi Pistaferri & Itay Saporta-Eksten, 2016. "Consumption Inequality and Family Labor Supply," American Economic Review, American Economic Association, vol. 106(2), pages 387-435, February.
    4. Daron Acemoglu & David H. Autor & David Lyle, 2004. "Women, War, and Wages: The Effect of Female Labor Supply on the Wage Structure at Midcentury," Journal of Political Economy, University of Chicago Press, vol. 112(3), pages 497-551, June.
    5. Nir Jaimovich & Henry E. Siu, 2009. "The Young, the Old, and the Restless: Demographics and Business Cycle Volatility," American Economic Review, American Economic Association, vol. 99(3), pages 804-826, June.
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    More about this item

    Keywords

    Women's employment; Business cycles; Great moderation; Jobless recoveries;
    All these keywords.

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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