This paper determines that the weaker positive pull of education into the labor market and weaker labor market conditions are the observed factors that contributed the most to the decline in the labor force participation rate (LFPR) between 2000 and 2004 among women ages 25–54. As is typical, however, unobserved factors contributed more than any single or combination of observed factors. Furthermore, if the unemployment rate rebounded to its level in 2000, the LFPR would still be 1.4 percentage points lower than it was in 2000.
JEL classification: J22, J11
Key words: female labor force participation, labor supply, labor force participation over the business cycle
This paper has benefited from conversations with and comments from M. Melinda Pitts, Robert E. Moore, and John C. Robertson. The views expressed here are the author’s and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the author’s responsibility.
Please address questions regarding content to Julie L. Hotchkiss, Federal Reserve Bank of Atlanta and Georgia State University, Research Department, 1000 Peachtree Street, N.E., Atlanta, Georgia 30309-4470, Julie.L.Hotchkiss@atl.frb.org.
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