The participation of women in the U.S. labor force has risen dramatically since

Question

The participation of women in the U.S. labor force has risen dramatically since 1970. How do you think this rise affected GDP? Imagine a measure of well-being that includes time spent working in the home and taking leisure. How would the change in this measure of well-being compare to the change in GDP? Are there any other aspects of well-being that are associated with the rise in women's labor-force participation. Would it be practical to construct a measure of well-being that includes these aspects?

Explanation / Answer

The rise of women in the workforce increased GDP because it represents an increase in the labor supply. However, the GDP does not include home production. So, if we had a measure of production that included home production (Let's call it FGDP), then FGDP would increase less than GDP as a result of women entering the workforce because they were previously engaged in home production. In fact, FGDP may stay the same if women produce the same in the workforce as they previously did at home. And FGDP may actually decrease if women were producing more in the home than they are producing in the workforce. However, it is not practical to construct a measure like FGDP that includes home production or other measures of well-being because these things are difficult to measure due to a lack of an explicit transaction.

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