Summer is ending. As the new school year gears up, some areas of economic activity will get seasonal boosts—such as increases in retail sales of office supplies as incoming students and their families buy what they need for the classroom. Female employment also picks up at this time of year. Recent research on labor markets finds that the childcare services provided by formal schooling drive this increase in employment.
The FRED graph above replicates Figure 1 in a related piece of research: the NBER Working Paper, “The Summer Drop in Female Employment,” by Brendan Price and Melanie Wasserman. The graph shows the non-seasonally-adjusted labor force participation rates among males (orange line with triangles) and females (blue line with dots) between 25 and 54 years of age. (The values are normalized to zero in December 2019.*) A close examination of this graph shows that, every summer, women’s labor force participation drops sharply, whereas men’s participation remains comparatively stable.
Why? During the summer, women reduce the amount of time they work outside the home; they are more likely than men to step in and provide some of the childcare services required while school is out for the summer. Vacations, summer school, and camps—supplemented by informal childcare by relatives, for example—do not add up to the six hours per weekday that children spend in school most of the year.
The research by Price and Wasserman helps answer the seasonal puzzle that the FRED Blog described last year, which helps tell the bigger story behind the numbers.
* The data in the NBER paper are two series from the Bureau of Labor Statistics available in FRED through the Organization for Economic Co-operation and Development’s Main Economic Indicators Release. Borrowing from Geoffrey Chaucer: All roads lead the data user to FRED.
How this graph was created: In FRED, search for “Activity Rate: Aged 25-54: Males for the United States.” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “Activity Rate: Aged 25-54: Females for the United States.” Use the “Edit Line 1” tab to customize the units by selecting “Index (Scale value to 100 for chosen date)” and enter “2009-12-01” in the date box. Click on “Copy to all” to apply the unit transformation to both series.