Explaining the Labor Force Participation of Women 20-24

Between about the mid 1960s and the late 1970s there was a remarkable rise in the labor force participation of women and then a leveling off that has persisted through the mid 1990s. This paper attempts to explain the labor force participation of women 20-24 over this period. A “relative income” variable is constructed based on Easterlin’s (1980) relative income hypothesis, and this is found to be an important explanatory variable. Easterlin’s “cohort wage” hypothesis is also used in the analysis. The basic equation estimated does very well in various tests that were performed on it, and it appears to explain well the rapid rise and then leveling off of the labor force participation of young women.