The labor force participation rate is the share of the population that is either a) working or b) looking for work (aka unemployed).

People who have no intention of working, like students or retirees, are not in the labor force.
1/
Labor force participation defines what the maximum sustainable economic growth rate can be.

This is easy to visualize.

After the last recession, per capita GDP growth fell below it's six-decade trend.
2/
But in fact, it remained on its *per participant* trend.

GDP growth is a function of the number of people working.

3/

Source: https://www.stlouisfed.org/on-the-economy/2018/august/gdp-labor-force-participation-economic-growth
For about forty years, GDP growth in the US was greatly bolstered by a disproportionately large generation that was working age (Boomers) and women's increase in participation.

Here's a good write up of that:
https://www.frbsf.org/economic-research/publications/economic-letter/2007/november/labor-force-participation-us-growth/

And a visual of women's labor force:
4/
So where are we in 2020?

At a breaking point.

Women's increase in work from the 1970s-1990s was not the result of a policy change or a big investment. Instead, it was the result of a "quiet revolution" in women's identity and careers.
5/
Women shifted from viewing work as temporary (until marriage or childbirth) or secondary (to their husband's preferences or to their roles as wives). They wanted careers. And work became part of their identity.

Claudia Goldin explains this very well:
https://scholar.harvard.edu/files/goldin/files/the_quiet_revolution_that_transformed_womens_employment_education_and_family.pdf
6/
But there's a limit to how far identify can get us, and that limit is called child care.

The pandemic has resulted in child care and school closures, and a coincidental decline in women's labor force participation.
7/
And this makes sense, there is lots of evidence of the inverse:

Even marginal increases in free child care increase women's labor force participation.

(Since the U.S. has made so little investment in child care, much of the evidence comes from other countries.)
8/
So:
1) labor force participation is a bedrock of economic growth
2) women's labor force participation has declined sharply this recession
3) increasing access to free child care increases women's labor force participation
4) we've never made that investment in the U.S.

10/
Appropriate and effective economic policy to recover from this recession is to invest in child care policy, from age 0-18:

Paid family leave
Free, locally available child care
Preschool starting at age 3
Longer school day.

11/
You can follow @keds_economist.
Tip: mention @twtextapp on a Twitter thread with the keyword “unroll” to get a link to it.

Latest Threads Unrolled: