Economic Horror Stories: The Great “Demancipation” and Economic Stagnation

UPDATED 08/03/13

Alternate title: “What We Can Learn from the Labor-Force Participation Rate”

The wholesale entry of women into the labor force after 1960 was considered (and still is, by many) to be a key sign women’s “emancipation.” Because of the baleful effects of that “emancipation,” I prefer to call it “demancipation.” What baleful effects? I begin with this, from a post that I wrote more than eight years ago:

Monetary measures of GDP exclude a lot of things that might be captured in the term “quality of life”; for example:

[F]ailing to account for the output produced within households may lead to misleading comparisons of economy-wide production, as conventionally measured. The female labor force participation rate in the United States has grown enormously since the early part of the 20th century. To the extent that the entry of women into paid employment has reduced the effort women devote to household production, the long-term trend in output, as measured by gross domestic product (GDP), may exaggerate the true growth in national output. [Committee on National Statistics (CNSTAT), Designing Nonmarket Accounts for the United States: Interim Report (2003), p. 9 in HTML version]

The “effort that women devote to household production” involves a lot more than shopping, cooking, cleaning, and all of the other activities usually associated with the term “housewife.” Not the least among those activities is the raising of children. Child-rearing (a quaint but still meaningful phrase) includes more than feeding, bathing, and toilet training. Parents — and especially mothers — impart lessons about civility — lessons that are neglected when children are left on their own to disport with friends, watch TV, and imbibe the nihilistic lyrics that pervade popular music.Yet, the apparently robust growth of real GDP per capita between owes much to the huge increase in the proportion of women seeking work outside the home. The labor-force participation rate for women of “working age” (14 and older in 1900, 16 and older in 2000) grew from 19 percent in 1900 to 60 percent in 2000, while the rate for men dropped only slightly, from 80 percent to 75 percent. Who knows how much damage society has suffered — and will yet suffer — because of the exodus into the workforce of women with children at home?

I went on, in that post and in later ones, to address the damage.

As it turned out, both the female participation rate and the overall rate peaked around 2000 (details here, Table 585). Here is a picture of the overall rate since 1960:

Labor force participation rate_Jan 1960 - Jul 2013
Source: Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey, Civilian Labor Force Participation Rate (LNS11300000).

The end of demancipation around 2000 wasn’t necessarily an unmixed blessing. Why? Because the graph points to another horror story: economic stagnation.

Look at relationship of the labor-force participation rate and recessions, which are represented by the gray columns in the chart. (The recessionary periods are those defined by the National Bureau of Economic Research, here.) Each recession has marked a reduction or leveling off of the labor force participation rate. This is an unsurprising relationship because dimmed prospects for employment will deter persons from joining or rejoining the labor force.

But the decline since 2000 — and especially since 2009 — is eloquent testimony to a growing lack of faith in the country’s economic prospects. That lack of faith is entirely justified, as I have explained in many of the following related posts:
The Laffer Curve, “Fiscal Responsibility,” and Economic Growth
The Causes of Economic Growth
In the Long Run We Are All Poorer
A Short Course in Economics
Addendum to a Short Course in Economics
The Price of Government
The Price of Government Redux
The Mega-Depression
As Goes Greece
Ricardian Equivalence Reconsidered
The Real Burden of Government
The Illusion of Prosperity and Stability
Estimating the Rahn Curve: Or, How Government Inhibits Economic Growth
Taxing the Rich
More about Taxing the Rich
America’s Financial Crisis Is Now
A Keynesian Fantasy Land
The Keynesian Fallacy and Regime Uncertainty
Why the “Stimulus” Failed to Stimulate
The “Jobs Speech” That Obama Should Have Given
Say’s Law, Government, and Unemployment
Unemployment and Economic Growth
Regime Uncertainty and the Great Recession
Regulation as Wishful Thinking
The Real Multiplier
Vulgar Keynesianism and Capitalism
Why Are Interest Rates So Low?
The Commandeered Economy
Estimating the Rahn Curve: A Sequel
In Defense of the 1%
The Real Multiplier (II)
Lay My (Regulatory) Burden Down
The Burden of Government
Economic Growth Since World War II
More Evidence for the Rahn Curve
The Economy Slogs Along
The Obama Effect: Disguised Unemployment
The Stock Market as a Leading Indicator of GDP
Government in Macroeconomic Perspective
Where We Are, Economically
Keynesianism: Upside-Down Economics in the Collectivist Cause
The Economic Outlook in Brief
Obamanomics: A Report Card