Culture as Learning: The Evolution of Female Labor Force Participation over a Century

Women’s labor force participation has increased dramatically over the last century. Why this has occurred has been the subject of much debate. This paper investigates the role of culture as learning in this change. To do so, it develops a dynamic model of culture in which individuals hold heterogeneous beliefs regarding the relative long-run payoffs for women who work in the market versus the home. These beliefs evolve rationally via an intergenerational learning process. Women are assumed to learn about the long-term payoffs of working by observing (noisy) private and public signals. They then make a work decision. This process generically generates an S-shaped figure for female labor force participation, which is what is found in the data. The S shape results from the dynamics of learning. When either small or large proportions of women work, learning is very slow and the changes in female labor force participation are also small. When the proportion of women working is close to 50%, rapid learning and rapid changes in female LFP take place. I show that such a model does a very good job in replicating the evolution of female labor force participation in the US over the last 120 years. †An earlier version of the model and simulation in this paper were presented in m