I n t h I s c h a p t e r y o u w I l L

A
DULTS
(
AGES
20 
AND OVER
)
White, male
3.2%
77.2%
White, female
3.4
59.7
Black, male
7.4
72.5
Black, female
7.9
64.8
T
EENAGERS
(
AGES
16–19)
White, male
14.1
56.6
White, female
10.9
55.4
Black, male
30.1
40.7
Black, female
25.3
42.5
S
OURCE
: Bureau of Labor Statistics.
Ta b l e 2 6 - 1
T
HE
L
ABOR
-M
ARKET
E
XPERIENCES OF
V
ARIOUS
D
EMOGRAPHIC
G
ROUPS
.
This table shows the
unemployment rate and
the labor-force participation
rate of various groups in the
U.S. population for 1998.
10
8
6
4
2
0
1970
1975
1960
1965
1980
1985
1990
2000
Percent of
Labor Force
1995
Natural rate of
unemployment
Unemployment rate
F i g u r e 2 6 - 2
U
NEMPLOYMENT
R
ATE SINCE
1960.
This graph uses annual data on the unemployment
rate to show the fraction of the labor force without a job.
Source: U.S. Department of Labor.
c y c l i c a l u n e m p l o y m e n t
the deviation of unemployment from
its natural rate

---

5 8 4
PA R T N I N E
T H E R E A L E C O N O M Y I N T H E L O N G R U N
C A S E S T U D Y
LABOR-FORCE PARTICIPATION
OF MEN AND WOMEN IN THE U.S. ECONOMY
Women’s role in American society has changed dramatically over the past cen-
tury. Social commentators have pointed to many causes for this change. In part,
it is attributable to new technologies such as the washing machine, clothes
dryer, refrigerator, freezer, and dishwasher, which have reduced the amount of
time required to complete routine household tasks. In part, it is attributable to
improved birth control, which has reduced the number of children born to the
typical family. And, of course, this change in women’s role is also partly at-
tributable to changing political and social attitudes. Together these develop-
ments have had a profound impact on society in general and on the economy in
particular.
Nowhere is that impact more obvious than in data on labor-force participa-
tion. Figure 26-3 shows the labor-force participation rates of men and women in
the United States since 1950. Just after World War II, men and women had very
different roles in society. Only 33 percent of women were working or looking for
work, in contrast to 87 percent of men. Over the past several decades, the dif-
ference between the participation rates of men and women has gradually di-
minished, as growing numbers of women have entered the labor force and
some men have left it. Data for 1998 show that 60 percent of women were in the
labor force, in contrast to 75 percent of men. As measured by labor-force partic-
ipation, men and women are now playing a more equal role in the economy.
The increase in women’s labor-force participation is easy to understand, but
the fall in men’s may seem puzzling. There are several reasons for this decline.
short-run economic fluctuations, including the year-to-year fluctuations in unem-
ployment around its natural rate. In the rest of this chapter, however, we ignore the
short-run fluctuations and examine why unemployment is a chronic problem for
market economies.
M
ORE WOMEN ARE WORKING
NOW THAN EVER BEFORE
.

---

C H A P T E R 2 6
U N E M P L O Y M E N T A N D I T S N AT U R A L R AT E
5 8 5
First, young men now stay in school longer than their fathers and grandfathers
did. Second, older men now retire earlier and live longer. Third, with more
women employed, more fathers now stay at home to raise their children. Full-
time students, retirees, and stay-at-home fathers are all counted as out of the
labor force.
D O E S T H E U N E M P L O Y M E N T R AT E M E A S U R E
W H AT W E WA N T I T T O ?
Measuring the amount of unemployment in the economy might seem straightfor-
ward. In fact, it is not. Whereas it is easy to distinguish between a person with a
full-time job and a person who is not working at all, it is much harder to distin-
guish between a person who is unemployed and a person who is not in the labor
force.
Movements into and out of the labor force are, in fact, very common. More
than one-third of the unemployed are recent entrants into the labor force. These
entrants include young workers looking for their first jobs, such as recent college
graduates. They also include, in greater numbers, older workers who had previ-
ously left the labor force but have now returned to look for work. Moreover, not all
unemployment ends with the job seeker finding a job. Almost half of all spells of
unemployment end when the unemployed person leaves the labor force.
Because people move into and out of the labor force so often, statistics on un-
employment are difficult to interpret. On the one hand, some of those who report
being unemployed may not, in fact, be trying hard to find a job. They may be
calling themselves unemployed because they want to qualify for a government
100
80
60
40
20
0
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995 '98
Labor-Force