AN ASSESSMENT OF THE PRODUCTIVITY EFFECT OF THE SHIFT OF WOMEN WORKERS OUT OF HOUSEWORK

The purpose of this study is to assess the productivity effect of the shift of women workers out of the household sector into paid employment for the United States economy during the period 1960-80. This study questions the validity of one explanation frequently cited to explain the decline in the growth of labor productivity since the mid-1960s: that the growing numbers of women working outside the home has reduced productivity growth. It is argued that the traditional GNP measure understates productivity growth in a period of rising female labor force participation, relative to a more comprehensive measure of economic output. To assess the quantitative impact of the household shift in a comprehensive measure of productivity, one that includes the household sector, the value of output produced in the household had to be obtained. Output was estimated using a Cobb-Douglas production function, considering the contribution of labor and capital inputs. The labor input was measured by the market wage foregone by allocating time to housework. Potential market wages were adjusted for the presence of barriers to intersectoral mobility of labor. Otherwise, potential market wages would overstate the value of household labor and understate measures of productivity growth. For the productivity analysis, a decomposition equation of aggregate productivity growth was used. This equation, developed by Norsworthy and Fulco, partitions changes in economy-wide average productivity into a productivity effect, a shift effect, and an interaction effect. The results show that if one adopts an expanded definition of the economy, then the slowdown in productivity growth since 1973 is substantially reduced. While the productivity gains from the shift out of housework have not completely offset the decline in productivity in the business sector, they have moderated it substantially.