Economics of Gender, Race, Family

Victoria Vernon, Ph.DEmpire State College

Lesson 1: Trends, Definitions

Changes for Women, 1960-2000

0

20

40

60

80

100

120

140

% wom enever

m arried, 20-24

% Singlem otherfam lies

births per1000

wom en, 15-44

% births tounm arried

wom en

% m arriedwom enworking

ratio ofwom ens

earnings tom ens

earnings

% B.A.degreesgoing towom en

1960

2000

Changes for Men, 1960-2000

0

20

40

60

80

100

120

140

% m en everm arried, 20-

24

% Singlefather

fam lies

% m arriedm en

working

1960

2000

8.9

22.8 20

0

5

10

15

20

25

1958 1982 2000

Divorces per 1000 Marriages

16.7 in 2005

Median Age of 1st Marriage

15

20

25

30

1890 1910 1930 1950 1970 1990

Males Females

What is Economics?Economics studies human behavior

Central question of Economics :How do we allocate LIMITED RESOURCES

to satisfy the most pressing of our UNLIMITED WANTS?

• Limited– Money– Time– Effort

We can’t always get everything we want

How do we make choices over alternatives?

Every Choice Has a CostOPPORTUNITY COST=

value of best alternative foregone 1. OC of taking 1 hour off work = lost hourly wage (ex:$20)

2. OK of being a full time mother for a year =

lost income and work experience (ex: $90,000)

Find opportunity cost of : 1. Taking this course2. Watching TV for 3 hours 3. Oprah Winfrey’s week of vacation4. Spending $ 200 on a pair of shoes

“Whatever is worth doing is worth doing well.” Always?

How do we make choices?• People are SELF-interested

– Maximize our own joy, happiness, UTILITY=subjective measure of joy, pleasure,

happiness, satisfaction from consuming goods/services

• People are RATIONAL– respond to incentives– compare COSTS and BENEFITS of alternatives,

select one with highest NET BENEFITS Examples of decisions:

Buy coffee or tea?Get married or not?Spend evening at home, rent a movie, or go to a show?

Rational decision example: Go to college?

• Benefits:–higher future income: $100,000– lower insurance rates: $10,000–better health: $50,000–other ?

Total benefits : $160,000

Benefits> Costs

• Costs:– tuition, books: $20,000– lost income: $100,000

Total cost: $120,000

Labor Force Participation Rate

LFPR =Number of people in the labor force (those working or looking for work)

Noninstitutionalized working age (age 16 and older)

population

* 100%

For example, in February 2007:

LFPR = 152,784,000

230,834,000* 100% = 66.2%

Labor force = employed + unemployedUnemployed = people actively looking for work

employed62%unempl.

4%

not in LF34%

Civilian Noninstitutional Population, 16+September 2004

NOT in the labor force• children• disabled• retired• housewives/househusbands• full time students• unemployed, not looking for work (discouraged workers)

Labor Force Participation Rates

0102030405060708090

100

Par

tici

pati

on R

ate

(%)

Males Females All

0

50

100

150

200

250

300

350

Mill

ions

of P

erso

ns

Population Labor Force

LFP of Married Women, 16+

16.724.8

31.7

41.450

58.4 61.3

0

10

20

30

40

50

60

70

1940 1950 1960 1970 1980 1990 2000

Historical Experience of College Women• Research by Goldin:

– Family and work experiences of college-educated throughout 1st half of 20th century.

• For that 1st birth cohort:– For both men and women, college rare around year 1900– For women: very rare to combine work and family.– 1/3 of women who went to college never married.– Nearly half never had kids (including ¼ who did marry).– Occupations: 60% school teachers.

• As move forward by cohort: college-educated women more and more likely to marry and have kids.

• Choices then and now:– First: work or family.– Then: work and family.– Now : career then family.