Half Changed World

Here’s something that I pulled together at work, and then wound up cutting from the document I did it for.  So I thought I’d share it here. 

This chart (from the new Indicators of Welfare Dependence report, issued by my old friends at HHS) shows the trends in labor force participation of married vs. divorced/separated/widowed vs. never-married mothers over the past 30 years.

I think it’s pretty remarkable how sharply the line for the never married mothers goes up in the 1990s.  So, what’s going on here?

Before turning to the question of why never married mothers labor force participation (LFP) rose so much during the 1990s, it’s first necessary to consider why it didn’t rise before the 1990s.  Another way to think of this question is to ask why did the labor force participation of married mothers rise during this period, and why didn’t the same factors increase the labor force participation rates of never married mothers (at least until the 1990s).

• One reason that labor force participation rates increased for married women is that women now have greater potential wages, which make paid labor more attractive.  Women are both more educated and more experienced than they used to be, and blatant labor market discrimination is far less common, opening many lucrative career options to women.
• However, these economic explanations only go so far; a key part of the story is changing societal norms that have made continued employment by married mothers, regardless of economic need, far more common.  As Blank and Shierholz comment, the effect of marriage itself on women’s labor force participation “virtually disappeared over time.”

What about divorced mothers?

• Same arguments as for married mothers, plus:
• Lack of alternative resources makes for lower reservation wages.
• Among more skilled women, single parenting has a positive effect on labor supply – true in both 1979 and 2003 (Blank and Shierholz)

So why didn’t the LFP for never married mothers rise in the 1980s?

• On average, younger, less educated than divorced mothers, so potential wages are much lower – may not equal the cost of child care or other lost benefits.
• In addition, the “child penalty” on LFP rate is higher for younger mothers, and less educated mothers, even when children are the same age (Boushey)
• Welfare provided a meager alternative to low-wage work – not a great living standard, but possible to eek by.  Kathy Edin’s work showed that low-wage work often didn’t provide any more disposable income.
• Welfare policies provided large incentive to keep all earnings off the books.
• In 1979, but not 2003, less skilled single moms were less likely than comparable childless women to work (Blank and Shierholz) – may be capturing the effects of welfare policy

What happened in the 1990s?

• Strong economy led to employment expansions for most low-income workers – male and female, parents and non-parents.
• EITC expansion greatly increased the returns to work in the formal sector for low-income parents – studies have shown that the effect was concentrated on single mothers.
• Time limits and work requirements largely removed the alternative of choosing full-time parenting over low-wage work for welfare recipients, even for parents of young children. Just between 1996 and 1999, the employment rate for single mothers under 200 percent of poverty with a child under the age of 6 increased from 44.4 percent to 58.5 percent.  (TANF 7th annual report, page IV-33).
• Work supports reduced the cost of going to work – child care, SCHIP, expanded earnings disregards.
• Rate of increase in LFP did increase for divorced women, but not as sharply as never-married women.
• Some of the increase in employment among never married mothers is likely due to composition effects – with declining teen birth rates, increases of overall non-marital birth rates, never married mothers are more likely to be older, more educated.

And in the 2000s?

• Weaker economy reduced both employment and LFP for all types of workers
• But married women’s LFP peaked in 1997, when economy was still booming – suggests that recession isn’t the whole story .  May be due to substitution with husbands’ earnings (although women’s LFP has become far less affected by husband’s earnings over time.)  (Blau and Kahn)
• Divorced women’s LFP peaked in 2001; never-married women’s LFP in 2002; single mothers under 200 percent of poverty in 2000.

This entry was posted on Monday, August 13th, 2007 at 8:47 pm and is filed under Statistics, Work-family choices. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.