Monday, July 9, 2018

A teaser about wages and labor force participation


 - by New Deal democrat

I was going to put up a short piece about wages this morning, but it has turned into a longer, more comprehensive piece, so in the meantime, here are some teasers to ponder.

1. There is a direct relationship between the economy generally, and child care costs specifically, and couples' decisions about whether or not to have more children:

The below graph comes from Vox.com. It is the top eight reasons that couples give for not having (more) children:



Note that 6 of the 8 reasons have to do with the economy, and 4 of those specifically have to do with the costs of child care.

2. While correlation is not causation, nonetheless in the modern era, there has been a clear correlation whereby prime age labor force participation leads nominal wage growth:



3. Despite #2 above, in the shorter term there appears to be an inverse correlation between the rate of prime age employment growth and relative wage growth:


I'll flesh this out in the more comprehensive post.