The evolution of women's choices in the macroeconomy
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Various macroeconomic effects resulted from the changing economic and societal structure in the second half of the 20th century, which greatly impacted women's economic position in the United States. Using dynamic programming as the main modeling tool, and U.S. data for factual evidence, three papers are developed to test the validity of three related hypotheses focusing on female employment, education, marriage, and divorce trends. The first chapter estimates how much of the post-World War II evolution in employment and average wages by gender can be explained by a model where changing labor demand requirements are the driving force. I argue that a large fraction of the original female employment and wage gaps in mid-century, and the subsequent shrinking of both gaps, can be explained by labor reallocation from brawn-intensive to brain-intensive jobs favoring women's comparative advantage in brain over brawn. Thus, aggregate gender-specific employment and wage gap trends resulting from this labor reallocation are simulated in a general equilibrium model. The material in the second chapter is based on an ongoing joint project with Fatih Guvenen. We argue for a strong link between the rise in the proportion of educated women and the evolution of the divorce rate since mid-century. As women become increasingly educated their bargaining power within marriage rises and their economic situation in singlehood improves making marriage less attractive and divorce more attractive. Similarly, a change in the divorce regime (e.g., U.S. unilateral divorce laws in the 1970s), making marriages less stable, incentivizes women to seek education as insurance against the higher divorce risk. A framework that models the interdependence between education, marriage and divorce is developed, simulated, and contrasted against United States data evidence. The third chapter considers the implications of marital uncertainty on aggregate household savings behavior. To this end, an infinite horizon model withperpetual youth that features uncertainty over marriage quality is developed. Similarly to Cubeddu and Ríos-Rull (1997), I test how much of the savings rate decline from the 1960s to the 1980s can be explained by the changing United States demographic composition, specifically the rise in divorce rates and the fall in marriage rates.