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Explaining the Rise in Prime Age Women’s Employment

PennWharton: “Earlier this year, the employment rate of prime working age women reached an all-time high, passing 75 percent for the first time in U.S. history. Defying widespread expectations that the COVID-19 pandemic would disproportionately harm the economic prospects of women, they have recovered faster than men and played a dominant role in the overall labor market recovery. In a forthcoming working paper, we review the evolution of prime age women’s employment over the last few decades and explain its recent rise. This brief summarizes and previews some of the findings from that ongoing work. We show that the current employment highs are a product of two long-term trends that predate the pandemic: 1) the rising share of women who are college graduates, and 2) a shrinking child penalty for college-educated mothers, who are increasingly likely to remain in the workforce after having a child. Despite the severe disruptions to labor markets, schooling, and childcare caused by the pandemic, these trends continued and even accelerated after 2020. In the full working paper, we link their resilience to the grand gender convergence in labor market outcomes, drawing on the work of Claudia Goldin, who was recently awarded the 2023 Nobel Prize in economics. We present additional evidence from changes in the occupational mix of women’s employment, discuss the impact of parental leave, and study the dynamics of child penalties in detail.”

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