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If Women Working Causes Inflation Then Women Must Be Less Productive Workers Than Men



Over at Politico there is the assertion that one reason for past inflation was that women joined the workforce. If there are more people earning then of course prices will rise. Don Boudreaux takes this on:

Victoria Guida offers the following as a reason for the 1970s’ high inflation rates: “double-income households as women entered the workforce in droves” (“Why big-spending Biden can shrug off GOP warnings of inflation,” April 12).

She’s mistaken. Inflation is not caused by an expansion of the workforce. Yes, the money that women earn is spent, and this additional spending would indeed push prices up if the amount of goods and services available for sale were to remain unchanged. But women entering the workforce earn for their households additional money to spend precisely by producing and making additional goods and services available for sale.

Which is a good answer, but it’s not a whole and complete one.

It is still possible that double income households did produce inflation. Or that the shift to their existence produced a bolus of inflation. The condition would be that the new female workers were not as productive as the male workers.

If this is true, or were true, then the higher incomes would not be met by the higher production to absorb them. But it is conditional upon female workers being less productive than male. And who, in these days of strong and independent women who wholly deserve exactly equal pay, would want to put that conjecture forward?

Well, those who insist that the rise in double income households led to the 1970s inflation at which point we get to call them out as patriarchal haters of course.

A more precise version of this assertion is that the rise of double income households increased house prices. It makes surface sense, the price a household is willing to pay for housing is a function of the income of the household. We can also assume, easily enough, that the labour of women is less productive in the provision of housing than the labour of men.

So, it could be true there. Except I have to admit than I’m deeply unconvinced. For two reasons. One is that the rise in the price of American housing is much more to do – as in the UK with planning permission – with zoning and such issues in the coastal cities than it is with a rise in the price of housing per se. And I’m entirely willing to agree that where supply is artificially constrained then dual income households could push prices up.

The second is that American house prices haven’t risen as much as people think. The square footage per person resident has soared over this same time period. People are consuming much more housing than they used to – the impact of the dual incomes is indeed – often, largely, perhaps – upon quantity, not just price. Sure, those 1960s bungalows going for $2 million in Palo Alto, that’s rising incomes meeting restricted supply. McMansions are people buying more housing with higher incomes.



  1. “One reason for past inflation was that women joined the workforce“.

    That joined bit isn’t strictly true is it? Women were always in the workforce – but they had a tendency to rotate in and out and back again, depending upon the presence and age of the dustbins.

    So, once effective contraception becomes widely available, you’ve got a change to the structure/behaviour of the labour pool.

    Wild guesses follow;

    Women entered the workforce at about the same age as men, call it 14 to 16 depending on school leaving age, filling whatever role. Each cohort of women, but not men, would begin to leave the workforce about, say, five years later, about age 20 to 21. By about age 25 or so, the men are still in the workforce, but the remaining women are rare.

    The men gain relatively higher human capital/experience/skills from simply remaining in the workforce for longer uninterrupted periods, resulting in higher wages over time. Women returning to the workforce, beginning in their mid-thirties, are in the same position as their 18 year old selves – limited skills and experience. They’re about 15 years out of date, a bit rusty. There’s a fifteen year wage/skills gap.

    Once that effective contraception enters the scene, women no longer rotate out as rapidly as before, such that there now way more women remaining in the workforce over the age of 25 than there ever were previously. And that change happens quite rapidly.

    More rapidly than can be reasonably coped with in the short term. After a lag, firms begin to find that the number of employees on the books is higher than it had been – employee churn had dropped faster than expected, resulting in higher total wage bills than expected. There’s only a few choices here – shed workers faster to restore the churn rate, limit wage growth (particularly for new entrants), apply a discount to female wage growth (that could get quite savage as women neared the average age of first partition), increase productivity, or raise prices, in order to maintain the rate of return demanded by investors.

    Raising prices is the obvious thing to try, as all the others run bang into hard issues pretty damn quick. Increasing productivity would be next, but you probably need a technological change to occur first.

    So, the pill became available in the UK on the NHS in 1961. For married women only. That restriction was removed in ’67.


    The 1972 to ’75 experience looks like the 1914-17 one.

    Intel released the 4004 in ’71. The 8086 in 1978.

    The lags in that ONS chart don’t half look suspicious.

    (The thought occurs – did anything else spike between ’61 and ’67? Marriage/household formation rates?)

  2. The majority of public sector workers are female (OECD says approx two-thirds in the UK 2013 https://www.oecd-ilibrary.org/docserver/gov_glance-2015-23-en.pdf?expires=1618422269&id=id&accname=guest&checksum=FDB8F822B29EB009D63F7CA96166A780 )
    BBC says “However, our research revealed that, for the US, the UK, and France, once we exclude health care and education, women’s public employment is still 20-50% higher than men’s. Interestingly enough, the gender bias is less pronounced within public health care and public education compared to other branches of public employment. …. Individuals holding full time jobs in the public sector work between 3-5% fewer hours compared to similar individuals holding full time jobs in the private sector. ”
    So, there *is* a reason why the average woman is less productive than the average man – he works longer hours. Since a certain amount of time is wasted by bureaucracy and checking in and checking out at the beginning and end of the day, and the percentage that takes of the working week decreases as the working week increases, the shorter working week makes women less efficient. The most significant part of this is not the 3-5% fewer hours worked by the public sector but the vast number of women working part-time.
    [Also within the private sector men working full-time work far more hours than women working “full-time”]

  3. @Ducky no the wage bill doesn’t increase. The employer has fewer more productive employees and the wage bill stays the same. If there is less churn, the wage bill actually drops a little. New hirings entail recruitment costs. I’ve noted a tendency for replacements to get better pay than the previous incumbent. Quite a bit depends on the automatic annual increase relative to inflation and the percentage selling price increase which the employer can get away with.


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