Female labor force participation and the price of housing

The New York Times informs us that female labor force participation is no longer increasing. "Today, about 75 percent of women 25 to 54 years old are either working or actively seeking a job, up from around 40 percent in the late 1950's," but this is down from 77% in 2000 and is less than the 90% labor participation rate for men in the same age bracket.

The article, in my opinion ignores the obvious reasons why work force participation has stalled. For many people, going to work sucks. Whether they have a crap job or their boss is an asshole, work isn't always the rewarding experience that ivory tower sociology professors imagine it to be.

However, I will forgo additional pontification regarding the factors behind the trend in favor of writing about how this effects the price of housing.

I believe that one of the reasons we have seen a huge increase in housing costs since the 1950s is because of increasing female labor force participation. Increasing the percent of two wage earner families increases the amount of money that's available to spend on housing. Because the supply of housing in many markets is fixed (because of zoning laws), prices are bid up. This is basic microeconomics, and it helps to explain why two incomes are often required today where only one sufficed in the past.

The end of the trend of increasing female labor force participation should have a downard impact on the price of houses, yet we have seen big increases in housing prices since 2000 when female labor force participation peaked. This is further evidence that there is a housing bubble.

Comments

[Pat L]

Even conceding inelastic supply of housing, I think that you have to take into account the fall in the real prices of all other goods that should result from more labor supply. This should compensate the one-earner household for the increased price of housing. The two-earner household will be richer than the one-earner household, but will have to put up with two sucky jobs instead of one. I'm a little out of practice with this stuff, maybe some micro gurus would like to take a stab at it...