24.2.16

THOSE ECONOMIC LAWS OF CONSERVATION.

No matter how many times I stress this, there's still reason to reinforce the lesson.  Here's Best of the Web's James Taranto, back before that service went behind a paywall, four years ago, suggesting that population growth has a different effect on wages than changes in labor force participation, specifically by increased female labor force participation.
For the purpose of our point, however, there is a very substantial difference between population growth and participation growth. The latter disrupts the labor market in a way that the former does not.

That's because growth in the population adds consumers as well as workers to the economy. In fact, since every worker is a consumer but not every consumer is a worker, population growth adds more consumers than workers to the economy. More consumers mean more demand for goods and services, and in turn for labor to provide them. That increase in demand countervails the increase in labor supply.

By contrast, women were consumers even before they entered the workforce en masse. And while a two-income household (or two one-income households) may consume more than an old-fashioned household with one breadwinner would, it is counterintuitive to suggest that a woman's entering the workforce, on average, increases the demand for labor as much as or more than it increases the supply.
No, but the nature of production and the nature of consumption change.  And Income = Wages + Interest + Rent + Profit.  Thus, it's irrelevant whether the demand for labor changes differently than the supply of labor in the presence of increased participation, compared with increased population.  What matters is that prices adjust.
To be sure, there are industries that have boomed as the result of the commercialization of what were formerly women's domestic duties. If you told someone in 1960 that you were planning to go into business running a "day-care center," you'd probably get a puzzled look.
Contemporary day care centers might have appropriated many of the gains to participation.  "At the margin, oughtn't the equilibrium working mom be indifferent between staying attached to the labor force (which makes the so-called pay gap go away) or leaving the labor force (which depresses lifetime earnings)."  Likewise, there's a margin to optimize between home cooking or outsourced cooking.  Here's Mr Taranto.  "Another example is prepared food, especially from fast-food restaurants. With Mom and Dad both busy at the office (assuming Dad is around at all), home-cooked meals are far less common than they used to be."

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