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Changing Business Cycles: The Role of Women's Employment

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  • Stefania Albanesi

Abstract

Women's labor force participation in the United States rose rapidly until the mid-1990s when it flattened out. I examine the impact of this change in trend on aggregate business cycles with a quantitative model that incorporates gender differences. I show that the rise in women's participation played a substantial role in the Great Moderation and not allowing for gender differences leads to incorrect inference on its causes. The subsequent slowdown in women's participation played a substantial role in jobless recoveries and reduced aggregate hours and output growth in expansions, worsening aggregate economic performance in the United States.

Suggested Citation

  • Stefania Albanesi, 2025. "Changing Business Cycles: The Role of Women's Employment," American Economic Journal: Macroeconomics, American Economic Association, vol. 17(4), pages 345-390, October.
    • Handle: RePEc:aea:aejmac:v:17:y:2025:i:4:p:345-90
    DOI: 10.1257/mac.20210138
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    Cited by:

    1. is not listed on IDEAS
    2. Guisinger, Amy Y., 2020. "Gender differences in the volatility of work hours and labor demand," Journal of Macroeconomics, Elsevier, vol. 66(C).
    3. Todd Potts & Jennifer Roy, 2025. "The heterogeneous impact of uncertainty shocks on labour market outcomes for men and women," Applied Economics, Taylor & Francis Journals, vol. 57(50), pages 8327-8345, October.
    4. Kim, Jiyeon, 2021. "Searching for the Cause of the Gender Gap in Employment Losses during the COVID-19 Crisis," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 43(2), pages 53-79.
    5. Coskun, Sena & Dalgic, Husnu C., 2024. "The emergence of procyclical fertility: The role of breadwinner women," Journal of Monetary Economics, Elsevier, vol. 142(C).
    6. Masao Fukui & Emi Nakamura & Jón Steinsson, 2023. "Women, Wealth Effects, and Slow Recoveries," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(1), pages 269-313, January.
    7. Henrique S. Basso & Omar Rachedi, 2021. "The Young, the Old, and the Government: Demographics and Fiscal Multipliers," American Economic Journal: Macroeconomics, American Economic Association, vol. 13(4), pages 110-141, October.
    8. Carta, Francesca & De Philippis, Marta, 2020. "Comments on “labor market trends and the changing value of time”," Journal of Economic Dynamics and Control, Elsevier, vol. 115(C).
    9. Nezih Guner & Yuliya Kulikova & Arnau Valladares-Esteban, 2025. "Does the Added Worker Effect Matter?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 56, April.
    10. Shaofeng Xu & Jie Feng, 2024. "Home production and time use in an epidemic," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 57(4), pages 1391-1433, November.
    11. Stefania Albanesi & Maria Jose Prados, 2022. "Slowing Women’s Labor Force Participation: The Role of Income Inequality," Working Papers 2022-037, Human Capital and Economic Opportunity Working Group.
    12. Daniel Chiquiar & Aldo Heffner, 2024. "Efectos heterogéneos de la pandemia del COVID-19 sobre el empleo femenino y masculino en México/Heterogeneous effects of the COVID-19 pandemic on Mexico’s female and male employment," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 39(1), pages 3-59.
    13. Eunice S. Han, 2024. "How did the COVID‐19 pandemic affect men's and women's returns to unionization?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 63(2), pages 172-204, April.
    14. Campos-Vazquez, Raymundo M. & Esquivel, Gerardo & Ghosh, Priyasmita & Medina-Cortina, Eduardo, 2023. "Long-lasting effects of a depressed labor market: Evidence from Mexico after the great recession," Labour Economics, Elsevier, vol. 81(C).
    15. Neyer, Ulrike & Stempel, Daniel, 2021. "Gender discrimination, inflation, and the business cycle," Journal of Macroeconomics, Elsevier, vol. 70(C).
    16. Halim, Daniel & Hambali, Sean & Purnamasari, Ririn Salwa, 2023. "Not All That It Seems : Narrowing of Gender Gaps in Employment during the Onset of COVID-19 in Indonesia," Policy Research Working Paper Series 10337, The World Bank.
    17. Ines Buono & Annalivia Polselli, 2022. "An international map of gender gaps," Questioni di Economia e Finanza (Occasional Papers) 714, Bank of Italy, Economic Research and International Relations Area.
    18. María Jose Luengo-Prado, 2021. "COVID-19 and the Labor Market Outcomes for Prime-Aged Women," Current Policy Perspectives 90899, Federal Reserve Bank of Boston.
    19. Matías Ciaschi & Guido Neidhöfer, 2024. "Job Loss and Household Labor Supply Adjustments in Developing Countries: Evidence from Argentina," The World Bank Economic Review, World Bank, vol. 38(3), pages 558-579.
    20. Asiimire Donath & Gertrude Fester & Medard Twinamatsiko & Benard Nuwatuhaire, 2021. "Women’s employment and the changing family pattern in Ankole Sub-region- Uganda," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 5(12), pages 323-335, December.
    21. Joseph Altonji & Disa Hynsjo & Ivan Vidangos, 2023. "Individual Earnings and Family Income: Dynamics and Distribution," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 49, pages 225-250, July.

    More about this item

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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