Government Subsidies And Restrictions Might Be The Cause Of Lower Female Labor Participation

See Why is female labor force participation down? from Marginal Revolution.

"There have been so many blog posts on male labor force participation, it is time to give women some additional coverage.  So Kubota, a job market candidate at Princeton, has an excellent paper on this topic.

Child Care Costs and Stagnating Female Labor Force Participation in the US

The increasing trend of the female labor force participation rate in the United States stopped and turned to a decline in the late 1990s. This paper shows that structural changes in the child care market play a substantial role in influencing female labor force participation. I first provide new estimates of long-term measures of prices and hours of child care using the Survey of Income and Program Participation. Hourly expenditure on child care rose by 40% and hours of daycare used declined by 20%. Next, I build a life-cycle model of married couples that features a menu of child care options that captures important features of reality. The calibrated model predicts that the rise in child care costs leads to a 5% decline in total employment of females, holding all else constant. Finally, this paper provides two hypotheses and their supporting evidence about the causes of rising child care costs: (i) restrictive licensing to home-based child care providers, and (ii) the negative effect of expanded child care subsidies to lower income households on the incentives for those individuals to operate the home-based daycare.

I will be continuing my coverage of interesting job market papers, as more interesting ones come on line."