1. Male Participation Rates, by Age

3. Female Participation Rates, by Age Most of the rise in participation rate is due to a rise in participation among married women . This is a surprising result since the rise in real wages of married men would have tended to decrease participation rates of married women

7. Female Participation Rates, by Race

8. Male Participation Rates, by Race

11. Why Have Hours of Work Remained Stable since 1945

14. Unemployment Rate

19. Budget Constraint Leisure Income/day 24 0 Budget constraint shows the combinations of income and leisure that a worker could get given a wage rate $120 At a wage rate of $5, a worker could get a maximum income of $120 per day ($5/hour * 24 ) At a wage rate of $10, a worker could get a maximum income of $240 per day. At a wage rate of $15, worker could get a maximum income of $360 per day. $240 $360 Slope of budget constraint (rise/run) = wage rate

20. Utility Maximization Leisure Income/day 24 0 The optimal or utility maximizing point is where the budget constraint is tangent to the highest attainable indifference curve $240 U 1 U 2 U 3 16 $80 A At a wage rate of $10/hour, the optimal hours of leisure is 16 (8 hours of work) at point A $360

21. Utility Maximization Leisure Income/day 24 0 The optimal or utility maximizing point is where the budget constraint is tangent to the highest attainable indifference curve $240 U 2 U 3 16 $80 A If the wage rate rises to $15/hour, the optimal hours of leisure is 15 at point B B At a wage rate of $10/hour, the optimal hours of leisure is 16 (8 hours of work) at point A 15 $360

22. Utility Maximization Leisure Income/day 24 0 $240 U 2 U 3 15 16 17 $80 A Income effect is measured through a parallel shift of the old budget constraint, from A to C (from 16 to 17 hours of leisure). Substitution effect is measured by movement along U 3 , from C to B (from 17 to 15 hours of leisure). Net effect is an increase of hours of work by 1 hour. B C Income and substitution effects