Cultural Change as Learning: The Evolution of Female Labor Force Participation Over a Century.

2013
Raquel Fernandez
in American Economic Review. Vol. 103, No. 1, 472 – 500.

Cultural Change as Learning: The Evolution of Female Labor Force Participation Over a Century.
This paper investigates the role of changes in culture in generating the dramatic increase in married women’s labor force participation over the last century. It develops a dynamic model of culture in which individuals hold heterogeneous beliefs regarding the relative long-run payoffs for women who work in the market versus the home. These beliefs evolve endogenously via an intergenerational learning process. Women are assumed to learn about the long-term payoffs of working by observing (noisy) private and public signals. This process generically generates the S-shaped figure for female labor force participation found in the data. I calibrate the model to several key statistics and show that it does a good job in replicating the quantitative evolution of female LFP in the US over the last 120 years. I also examine the model’s cross-sectional and intergenerational implications. The model highlights a new dynamic role for changes in wages via their effect on intergenerational learning. The calibration shows that this role was quantitatively important in several decades.