If 3,000 women quit their jobs, decide to stop looking for work and instead stay at home with their children what is the female labor force participation rate?

1. Use the following data http://www.bls.gov/cps/cpsaat03.pdf

 

1. a) What was the female labor force participation rate in 2019? (1/2 pt)

For all of the following questions treat the numbers in thousands to match the data provided. (i.e. the female noninstitutonal population in the dataset is 133,822 which corresponds to 133.8 million women and 3,000 in part b)is really 3 million.)

1. b) If 3,000 women quit their jobs, decide to stop looking for work and instead stay at home with their children what is the female labor force participation rate? Show your work. (1 pt)

 

1. c) Ignoring the changing in part b) if 500 unemployed women find part-time work what is the female labor force participation rate? (1/2 pt)

 

1. d) What is the labor force participation rate for prime-aged Black women? (1/2 pt)

 

1. e) If 1,000 black women between the ages of 25-54 who were previously housewives have nervous breakdowns and end up in a mental institution. What is the new female labor force participation rate for prime-aged women? (1.5 pt) Show your work.

 

2. f) Married white men have a higher labor force participation rates and earn more than married black men. Assume that people marry within racial group. If everything else , including her wage, was the same which group black women or white women should have the higher female labor force participation [Explain and/or Show graphically]? According to the data, which group has the higher female labor force participation rate (choose women old enough to be married and include the data for each group)? (2.5 pts)

 

2. Imagine that Jamie is a working mother who earns $15 an hour but must spend $5 an hour on childcare. She has 60 hours a week to devote to either work or leisure. She has no non-labor income.

 

1. a) On a clearly labeled graph, draw Jamie’s budget constraint. (2 pts)

 

1. b) Now add an indifference curve such that Jamie’s preferred consumption bundle contains 36 hours of work. (1 pt)

-How many hours of leisure does Jamie consume? (1/2 pt)

 

1. c) Now the government passes a child benefit that gives all mothers (working and non-working) $300 a week to buy necessities for their children. On the same graph draw Jamie’s new budget constraint and show her new preferred consumption bundle.

-What happens to the amount of time Jamie spends working? (up, down unchanged) why? (Use the words income and/or substitution effect in your answer.) (3.5 pts)

 

1. d) According to your graph, how large of a child benefit would the government need to provide for Jamie to stop working entirely. (Note there are different answers depending on the shape of the original indifference curve.) (1.5 pts)

 

1. e) Give another example of something else that would increase non-labor income. (1/2 pt)

 

3. Redraw the budget constraint and indifference curve from question 2 parts a) and b) where Jamie worked 36 hours.

 

Instead of providing the child benefit the government decides to offer free childcare. On your new graph draw Jamie’s new budget constraint and show her preferred consumption bundle. According to your graph, is she in the labor force? (2.5 pts)

 

1. b) What happens to the amount to time Jamie spends working? (up, down unchanged) Which effect dominated the income effect or the substitution effect? (1.5 pts) (Note different people may have different answers depending on the shape of the original indifference curve.)

 

1. c) Which policy the child benefit or free childcare is more pro-work? (1/2 pt)

 

4. Give one example of home production. (1/2pt)

 

1. b) Is home production closer to market work or to leisure? Why? (1 pt)

 

1. c) In utility terms, is the value of the 3^rd hour of market work likely worth more, less, or the same than the value of the 10^th hour of market work? Why? (1 pt)

 

1. d) What rule is used to decide how to allocate time between home production and leisure? (1/2 pt)

 

1. d) If the value of every hour of home production goes up, what will happen to MVT*? What will happen to the number of hours spent on leisure? What will happen to the number of hours spent on market work? Explain (2 pt)

 

1. e) What should the introduction of labor-saving household devises do female labor force participation? Why? (2 pts)

 

 

5. Assume that both college-educated women and high school graduates have $100 in non-labor income a day and 10 hours of time. The high school graduate earns $15 and hour while her college counterpart earns $30. Also assume they have the same preferences. Which type of women should be more likely to participate in the labor force? Why? (use the words income and/or substitution effect) (1.5 pts)

 

7. b) Use the following data : http://www.bls.gov/cps/cpsaat07.pdf. What is the labor force participation rate for women with a high school diploma in 2019? What is the labor force participation rate for women with a bachelor’s degree and higher? Does the data agree with your answer to part a)? (1 pt)

 

3. c) On the same graph, draw the budget constraint for the high school graduate and the college graduate according to the information in part a) Add a set of indifference curves that support your answer to part a) (i.e. such that one of the women is in the labor force and the other is not). (3.5 pts)

 

6. A paper by Goldin and Olivetti investigated if the new opportunities to work caused by WWII lead to long-run increases in labor force participation.

 

1. What variation is used to define the treatment and control group in the natural experiment? (1 pt)

 

1. According to the study for which subgroup of women did the opportunities to work caused by WWII lead to long-run increases in labor force participation? Why? (2 pts)

 

7. Explain one way in which the US government subsidizes childcare. (1 pt)

 

1. b) For the program that you picked which socioeconomic groups benefits the most (is most likely to be eligible)? (1/2 pt)

 

8. If the enforcement of anti-discrimination laws increased wages, what should happen to hours worked for those women who were already working ? (If unknown explain why) (1.5 pts)

 

1. b) If the enforcement of anti-discrimination laws increased wages, what should happen to female labor force participation? (If unknown explain why) (1.5 pts)

 

7. Under the official poverty measure, how does the federal government determine the official poverty threshold (i.e if the poverty threshold is $21,720 for a family of three where did the $21,720 number come from)? (1.5 pts)

 

1. b) Suppose a single mother with two children earns $18,000 pre-tax, receives $3,000 in welfare benefits, is eligible for $1,500 in food stamps/SNAP, gets $2,500 in EITC, and must spend $2,000 on childcare expenses are they considered officially poor? Why or why not? Show your work. (1.5 pts)

 

8. Read the attached article on the new “ Supplemental Poverty Measure” before answering the following questions:

 

1. a) Which of the following sources of income are counted as (or subtracted from) household resources when determining if a household is poor under the new supplemental poverty measure? (2 pts)

Own earnings, spouse’s earnings, Foodstamps/SNAP; Welfare/AFDC; Medicare; housing subsidies; taxes/tax credits, child care/child support expenses, out-of-pocket medical spending, spending on food

 

1. b) Since households with children are more likely to receive government transfer programs, if the new “ Supplemental Poverty Measure” changed the way in which benefits from transfer programs are considered but left everything else the same what would happen to the percent of the people under the age of 18 who are poor? Why? According to the data in the article what happens to the percent of the people under the age of 18 who are poor if we switch poverty measures. Which change in the treatment of transfer programs makes the biggest difference in estimates of child poverty? (2 pts)

 

1. c) Which expenses are used to determine the poverty threshold when computing the new supplemental poverty measure? (1 pt)

Food, clothing, transportation, cell phones, shelter, utilities

 

1. d) Discuss one other difference between how the official poverty measure is constructed and how the new poverty measure is constructed. (1 pt)

 

1. e) What fraction of people in cohabitating household units were officially poor in 2018? What fraction of people in married couple units were officially poor in 2018? (1/2 pt)