U-Shaped Female Labor Force Participation

Notes taken from Goldin's 1990 book "The Gender Gap: An Economic History of American Women"

In Goldin 1990, she says married women in 18th century engage in unpaid employment within their families excluding only homemaking activities. Hence, she criticizes earlier lf data by excluding unpaid employment of married women. Since 1940, these labors are also counted as economically active according to ILO definition of economically active population. Hence, it matters for the labor force participation of women. So, in her 1990 book (Section 2, “Economic Development and the Life Cycle of Work”), Goldin talks about basically three biases that pre-1940 data has.

Change in definition of labor force
Omission of workers in the census count
Change in the locus of production in the economy (Production moves from home to market)

Before 1940, individuals are included in the labor force under the gainful worker concept. An individual is gainfully employed if she reports herself as a paid worker. After 1940, labor force is defined to be economically active population as in ILO construction. According to this definition, labor force includes all individuals working for pay, unpaid family workers and unemployed people looking for jobs during the survey week. Once Goldin corrected the definition of labor force before the 1940 levels, she finds that lfp of married women did not remarkably change.

The second bias seems to be the more serious one. Especially in the late 19th century and early 20th century, large fraction of working women were reluctant to report their employment or census takers were biased against reporting women’s employment. Conk (1980) provides evidence that most census takers mostly presumed that married and adult women are unemployed and altered data if occupations are unusual and atypical of female jobs. There are especially three occupations where people tend to misreport their employment status: Boardinghouse keepers, agricultural workers and manufacturing workers.

How did Goldin correct the data for Boardinghouse keepers?

She used The Sixth Annual Report of the Commissioner of Labor (1890) and the Seventh Annual Report (1891), hereafter 1890/91 Report as Goldin suggested. This data included the data on income from boarders and number of boarders in industrial areas. As the earnings are gross earnings, she followd the following procedure to pin down the labor force participation.
16% of husband-wife families reported they receive income from boarders. Their annual income from boarders was $201.
When the expenses of additional cost of running a house with boarders are excluded, the net profit of boarding house is $140.
It is found that 16% of husband-wife families and 20% of female-headed families earn approximately 50% of their annual earnings from boarding housekeeping.
If you apply gainfully employed concept, as having an occupation means earning half of your yearly income from that occupation, 37% of all boarding house keepers should be in the labor force. If you apply post-1940 definition of labor force, as 37.5% of 40 hours work week, 46% of all boarding house keepers should be included in the labor force. Per latter, I believe they find the working hours by pinning down how many hours of week should a person work to earn $140/52 amount of money per week. Not sure though.

Goldin only did these adjustments for the above workers in 1980 and finds that labor force participation of married women in 1890 was equal to or above the level of labor force participation of white women in 1940. The largest adjustment stems from unpaid workers on family farms and undercounting of boardinghouse keepers. Hence, this suggests a U-shaped participation rate for married women and adult women. Adult women are mostly widows.

Single Women in 1890

In the early phases of industrialization (around 1840s), labor force participation of young women and children increased tremendously (Abbott 1910, Goldin and Sokoloff 1982). Because the only evidence from this period comes from manufacturing sector, most papers are generally on this sector.

When we look at overall labor force participation, Goldin states that between 1890-1960 it is fairly stable. On the other hand, their school attendance increase a lot between 1890-1930 period. Because the labor force participation rate remained virtually constant with increasing schooling, Goldin states that they must have altered their market activity with home production (Goldin 1990).