How Women’s Participation in the Labor Force Has Affected Economic Growth and Real Wages.

Sammanfattning

Around the mid-20th century, women transitioned from traditional housewife roles to active participants in the labor market. The basic notion of supply and demand in economic theory suggests that an increased labor supply should result in lower real wages, potentially leading to a decline in living standards. Contrary to this expectation, real wages have generally risen over time. This thesis investigates whether the rise in female labor force participation rates has positively or negatively influenced real wages. The null hypothesis is that female labor force participation rates are negatively correlated with real wages, and the alternative hypothesis is that it is positively correlated. Utilizing the Cobb-Douglas production function and the Solow growth model, the analysis considers both theoretical frameworks and empirical data. Data on the number of female and male employees and the men’s real wages in each of the four different occupational groups are collected and analyzed both graphically and with regression analysis. These four groups range from highly qualified work tasks to less qualified work tasks, in the following order: 1. Leading roles in technical areas 2. Independent work in technical areas 3. Other staff except assistant staff in technical areas 4. Office assistant staff Much has been written about women’s entrance into the workforce and the reasons behind it, but there appears to be limited, or no previous research on how this has impacted real wages or the overall standard of living. This is a profound question that therefore requires a thorough analysis of data and existing literature, a task exceeding the scope of this thesis. Instead, this thesis attempts to take a smaller step towards the collection of evidence on the issue. The regression analyses show a statistically significant negative correlation, as described by the null-hypothesis. Although in the graphical analyses there are signs that this correlation might merely be a coincidence. Therefore, a concise conclusion about whether the rise in female labor force participation rates has a positive or negative impact on real wages, if any impact at all, cannot be made.