So I wanted to look into Bob Lucas’s suggestion that

A) Europe is suffering from tax policies that discourage married women from working

B) The recession in the US is lingering because we are adopting European style policies, presumably thus discouraging married women from working.

Here is the raw ratio of labor force participation level of married women to married men over time in the United States. I had to back it out from the employment level and unemployment rate so the arithmetic is a little involved but here are the results.

FRED Graph

There is clearly a trend but it seemed to level out sometime in the early 90s, interestingly before booming employment and growth set in. It dipped in the 2000s and is actually higher in the wake of the Great Recession.

We can take a close up over the last 20 years

FRED Graph

We can see a strong step up in the ratio after the Clinton tax increases, reaching a peak around 2000. In the wake of the Bush tax cuts, the ratio begins to decline hitting a local low around 2005. Yet, note that after the passage of ObamaCare the ratio spike significantly and remains near record highs.

From this evidence one might deduce that tax cuts decrease the relative incentive of married women to seek work.

Now, I personally think that narrative is a line of crap and that what’s really at work here are changes in the market. Basically an effort to decrease class sizes in K12 drove an increase in female employment during the 1990s. This was counteracted by increasing construction employment which peaked around 2005.

Over the long run and in the recent episodes I don’t think you really see tax policy as an effect.

Also just because I think it should be done, here is the long run trend in logs

FRED Graph

And the growth in the trend

FRED Graph

Both of these confirm that the strongest growth was in the late sixties. However, even in the late 60s / early 70s the bump in the trend growth rate is not that wild. That is, what I interpret – I am not a historian here – as the peak of the women’s rights movement didn’t move the dial that much. These things are deep, really deep. If you can’t alter them with radical social movements you are not going to alter them with relatively small changes in marginal tax rates.

There is still more to be said about taxes and household labor supply but I do not think a simple story about married women’s work efforts fits the facts.

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