Persistence Effects in Labor Force Participation

This paper examines empirically two facets of labor force participation dynamics that imply quite different interpretations of labor market fluctuations. The first, which underlies equilibrium business cycle models, is that workers time their participation to coincide with periods of high real wages. The second, which implies the existence of involuntary unemployment during cyclical downturns, is that workers' current labor force status is heavily influenced by their work experience in the recent past. The authors' results suggest that these persistence effects are a key feature of labor force behavior, particularly for teenagers, adult women, and older men. In contrast, very little evidence could be found to support the intertemporal substitution hypothesis.

Some Direct Evidence on the Importance of Borrowing Constraints to the Labor Force Participation of Married Women

This paper examines the link between credit availability and the labor supply decisions of married women. In particular, it uses data from the Survey of Consumer Finances to test the role of some direct measures of borrowing constraints in a standard labor force participation equation. Although imperfect capital markets may alter the options available to households in a life-cycle context, the results suggest that borrowing constraints are of little importance to the labor force participation decisions of married women.