Women in the Economy - Key Concepts and Terminology

Comprehensive vocabulary flashcards covering labor market concepts, microeconomic household models, and policy terminology related to women in the economy.

Scarcity

The idea that there are not enough resources to satisfy everyone's (every) need, leading choices to be made at the personal, household, and societal level.

Rationality

The concept that each individual has a set of preferences and chooses alternatives that maximize utility by considering all available information, probabilities of events, and potential costs and benefits.

Utility maximization (optimizing behavior)

A key insight into consumer theory (and the theory of the firm) where people choose among alternatives given a set of constraints to achieve the highest possible utility (highest possible indifference curve given constraints).

Marginal utility

The amount of additional satisfaction or utility a consumer receives from consuming one more unit of a good or service.

Marginal rate of substitution (MRS)

The slope of the indifference curve; when considering the PPF, it represents the quantity of market goods given up for an additional unit of home goods.

Satisficing

The behavioral practice where people choose a satisfactory alternative rather than maximizing to the fullest extent, due to the high difficulty and cost of obtaining full information on every alternative.

Labor supply curve

An upward-sloping curve showing the relationship between the wage rate and the amount of labor supplied across all workers; shifted by tastes, preferences, immigration, population growth, and changes in opportunity.

Labor demand curve

A curve representing the amounts of labor that firms across the labor market would hire at various wages over a given period; shifted by output prices, technological change, and the supply and price of other factors of production.

Equilibrium wage rate ($w^*$)

The wage rate at which the quantity of labor supplied and the quantity of labor demanded are equalized in the labor market.

Endogenous variable

A variable that an economic agent chooses or determines within the model, representing the outcome being explained (such as a household's hours of work or quantity consumed).

Exogenous variable

A variable given to an agent from outside the model that cannot be altered by their own choices within the model (such as non-labor household income, the price of a good, or a government subsidy).

Comparative statics

The analysis of what happens to hours worked ($H$) when there is a change in the market wage ($W$), reservation wage ($W^*$), or income ($y$).

Labor force participation rate (LFPR)

The percentage of the working-age population (ages 16–64) in the labor force, calculated as $\text{LFP} = \frac{\text{LF}}{\text{Pop}}$, where the labor force includes both employed and unemployed individuals.

Employment rate

The share of the working-age population (ages 16–64) that currently holds a job, calculated as $\frac{E}{\text{Pop}}$, counting underemployed and involuntarily part-time workers as employed.

Unemployment rate

The share of active job seekers who cannot find work, calculated as $\frac{U}{\text{LF}}$, excluding discouraged workers and individuals who have opted out.

Added worker effect

The entry into the labor force or postponement of exit by other family members when the primary earner becomes unemployed, which increases the secondary earner's hours worked.

Discouraged worker

An individual who loses their job, becomes discouraged from searching for a new one due to low expected wages, and exits the labor force; more common during economic downturns than added workers.

Marriage bar

Institutional policies first instituted in the late 1800s that prohibited the employment of married women, particularly prevalent in teaching and clerical work.

Opportunity cost

The value of the next best alternative forgone when making a decision between alternative actions; forgone production.

Comparative advantage

The ability of an individual or entity to produce a good at a lower opportunity cost than peers or competitors.

Absolute advantage

The ability to produce a greater quantity of a good, product, or service than peers or competitors using the same amount of resources.

Production possibilities frontier (PPF)

A curve showing all possible combinations of home and market goods an individual can create if they dedicate all their available time; its slope reflects how much market production is forgone for an additional unit of home production.

Gains from specialization

The increase in a household's total economic well-being when each partner dedicates their full time to the activity in which they hold a comparative advantage.

Scale economies

The reduction in average per-person living costs achieved by sharing living expenses such as rent, making joint living cheaper than living solo.

Marriage-specific investment

Skills, knowledge, or assets developed during a marriage that have significantly greater value within that marriage than if the relationship ended (e.g., raising children, shared hobbies).

Externality (within marriage)

A cost or benefit experienced by one partner resulting from the other partner's consumption or actions, such as positive enjoyment from skill acquisition (cooking, music) or negative effects from smoking in the home.

Public good

A good that is non-rival and non-excludable in consumption, meaning additional consumers do not raise its cost and gains increase from joint consumption (e.g., home heating, video streaming).

Reservation wage ($w^*$)

The minimum hourly compensation required to induce an individual to enter the labor force and supply their first hour of labor, represented by the MRS at zero hours worked.

Budget constraint (Becker 1964 model)

A line illustrating the total daily income generated at each possible number of labor hours supplied.

Non-labor income

Any income an individual receives independent of their own labor market earnings (such as a spouse's earnings or dividends).

Market wage ($w$)

The hourly rate of pay an individual can earn by supplying their labor to the workforce.

Indifference curve

A curve connecting combinations of two goods (such as market income and non-market time) that provide the same level of total utility, characterized by completeness, transitivity, and continuity.

Utility function

A mathematical representation assigning a numerical value (in utils) to satisfaction from goods and non-market time, modeled as $U = U(C, G) - sS$, where $S = 1$ if working a blue-collar job and $S = 0$ otherwise.

Income effect

The change in labor supply associated with a change in family income, holding wages constant; expressed as $\frac{\Delta \text{hours of work}}{\Delta y\,(\text{income})}\Big|_{\bar{w}} < 0$.

Substitution effect

The change in labor supply resulting from a change in the wage rate, holding real income constant; expressed as $\frac{\Delta \text{hours of work}}{\Delta w\,(\text{wages})}\Big|_{\bar{y}} > 0$.

Stigma effect ($s$)

The direct loss of household utility caused by cultural disapproval when a married woman engages in blue-collar employment, entering the utility function as $-sS$.

Total fertility rate

An estimate of the number of births a cohort of 1,000 women would have if they experienced the specific age-specific birth rates of a given year throughout their childbearing years.

White-collar job

Non-manual, office-based employment that is generally accessed through formal educational credentials.

Blue-collar job

Manual and physical occupations.

Pink-collar job

Predominantly female occupations that expanded during the 1950–1970 era, including secretaries, nurses, teachers, and social workers.

Marriage market

A conceptual framework used to evaluate how individuals search for, assess, and match with partners based on attributes (assortative matching), preferences, and economic resources.

No-fault divorce

A legal divorce framework introduced in the 1970s that does not require demonstrating marital fault or wrongdoing by either party.

Unilateral divorce

A legal rule allowing a marriage to be legally dissolved at the request of either spouse without requiring mutual consent.

Welfare system

A collection of government transfer programs designed to alleviate poverty and improve economic well-being.

Aid to Families with Dependent Children (AFDC)

A federal entitlement program created under the Social Security Act of 1935 providing cash assistance to eligible low-income single mothers and children.

Temporary Assistance for Needy Families (TANF)

The welfare block grant program established in 1996 to replace AFDC, providing states with federal funding for cash aid, subsidized childcare, and job training for low-income parents.

Marriage premium (in wages)

The empirical finding that married men earn higher wages than unmarried men, attributed to household specialization and positive selection bias for marriageable traits.

Motherhood penalty (in wages)

The empirical finding that mothers earn lower wages than comparable childless women, driven by work interruptions, demands for temporal flexibility, employer bias, and human capital depreciation.

Opt-out 'revolution'

A 2000s narrative following a drop in female labor force participation (from 58.7% in 1998 to 54.6% in 2003) arguing that highly educated women were leaving careers, though largely limited to high-income households.

Baby boom

The post-WWII period from 1946 to 1964 characterized by a sharp spike in birth rates and a concurrent long-term rise in female labor force participation.

Social norm

A shared, typically unwritten standard that governs acceptable and expected behavior in a society.

Identity

A set of distinguishing personal and social characteristics, commonly including gender, race, and sexuality.

Competitiveness

The behavioral inclination of individuals, families, or nations to compare and benchmark their performance relative to others.

Natural experiment

An observational study where empirical variation is driven by real-world events or policy shifts outside the researcher's control, rather than lab manipulation.

Laboratory/field experiment

An empirical design where subjects are randomly assigned to treatment and control groups while environmental conditions are systematically controlled.

Matrilineal society

A social system in which property inheritance, family descent, and post-marital residence are traced through the maternal lineage.

Patrilineal society

A social system in which property inheritance, family descent, and residence are organized around the paternal lineage.

Occupational segregation

The unequal clustering of men and women across different jobs and industries, driven by gender socialization, hiring discrimination, and domestic roles.

Socialization

The developmental process by which family, peers, educators, and media shape an individual's attitudes, values, and gender roles.

Gender pay gap

The difference in average earnings between men and women, often measured with or without adjusting for education, industry, occupation, and work experience.

Human capital

The productive skills, knowledge, and abilities embodied in a worker, acquired through formal schooling, on-the-job training, and job search.

On-the-job training

Acquiring job-related skills in the workplace via employer-provided instruction, coworker shadowing, or learning-by-doing.

Firm-specific skill / training

Training that enhances a worker's productivity exclusively within the firm providing it, having zero or minimal value to outside employers.

General skill / training

Transferable knowledge and skills that raise a worker's productivity equally across many employers (e.g., standard software literacy).

Work experience

The cumulative number of years or hours an individual has actively spent working in the labor market.

Net present value (NPV)

A financial metric that evaluates the profitability of an investment by comparing the discounted present value of expected future cash flows to the initial upfront cost.

Discounted (present) value

The current economic value of a future sum of money or stream of cash flows, discounted by an interest rate reflecting the time value of money and uncertainty.

Direct cost of education

Out-of-pocket financial expenses required to enroll in and attend college, including tuition, fees, and books.

Foregone earnings (indirect cost)

The opportunity cost of attending school full-time, represented by the earnings a student sacrifices by not working in the labor market.

Labor market discrimination

Differential treatment of equally productive individuals in compensation, hiring, assignment, promotion, or firing based on personal characteristics like gender or race.

Pre-market discrimination

Discrimination and biased expectations that occur prior to labor market entry (such as in schools or families), altering human capital acquisition and productivity.

Oaxaca decomposition

An econometric technique that divides a wage gap into an explained portion (differences in human capital and job traits) and an unexplained residual portion attributed to discrimination.

Residual pay gap

The remaining wage disparity between groups that persists after statistically controlling for all observable qualifications and productivity variables.

Observable characteristics

Worker and job attributes documented directly in dataset records, such as age, completed years of schooling, and industry.

Unobservable characteristics

Worker traits that are missing from data or difficult to measure directly, such as intrinsic motivation, drive, grit, and school quality.

Residual approach (for measuring discrimination)

Estimating discrimination by measuring the unexplained wage gap leftover after controlling for all observable productivity factors.

Causal effect

A relationship showing that a direct change in one variable produces a specific change in another, distinct from simple statistical correlation.

Feedback effect (of discrimination)

A cycle where anticipated labor market discrimination disincentivizes workers from investing in human capital, reinforcing existing pay and status disparities.

Taste-based discrimination

Gary Becker's model where discrimination is driven by personal prejudice or animus against a group among employers, coworkers, or customers.

Statistical discrimination

Differential treatment resulting from imperfect information and risk aversion, where employers use group averages to judge individual worker productivity.

Implicit discrimination

Unconscious biases or cognitive stereotypes that unintentionally influence hiring, evaluation, and compensation decisions.

Implicit Association Test (IAT)

A psychological test that measures automatic, unconscious associations and cognitive biases toward specific social groups.

Discrimination coefficient ($d$ or $a$)

The parameter in Becker's taste-based discrimination model representing an employer's disutility from hiring a minority worker, making the perceived wage cost $W_f + a$ where $a > 0$.

Non-pecuniary cost

A psychic or subjective disutility that cannot be directly measured in monetary currency, such as distaste or prejudice.

Asymmetric information

A market condition where one party in an exchange possesses more or better relevant information than the other (e.g., a job applicant knowing their work ethic better than the hiring firm).

Risk aversion

The behavioral tendency of economic agents to prefer certain outcomes over uncertain ones with equal expected value.

Audit study

A field research technique where matched pairs of trained actors with identical resumes differing only by a single demographic trait apply for real jobs or transactions to test for bias.

Correspondence study

A discrimination study where researchers submit fictitious resumes with manipulated demographic signals (like names) to real job openings to track callback rates.

Stereotype threat

A psychological phenomenon where awareness of a negative stereotype regarding one's identity group induces anxiety, causing underperformance in that domain.

Affirmative action

Proactive organizational policies and legal mandates designed to expand educational and workplace opportunities for historically marginalized demographic groups.

Reverse discrimination

A term describing preferential policies that disadvantage members of a historically dominant group in favor of an underrepresented group.

Equal Pay Act of 1963

A federal law mandating that men and women receive equal pay for performing substantially equal work under similar conditions in the same establishment.

'Mommy track'

A career path offering flexible scheduling or reduced hours to accommodate caregiving, but which curtails promotion and leadership prospects relative to partner tracks.

Adverse selection

A market failure caused by asymmetric information where high-risk or benefit-seeking individuals disproportionately self-select into specific options (e.g., workers desiring parental leave choosing firms that offer it).

Pregnancy Discrimination Act of 1978

An amendment to Title VII of the Civil Rights Act prohibiting employment discrimination on the basis of pregnancy, childbirth, or related medical conditions.

Family and Medical Leave Act of 1993 (FMLA)

A federal law requiring employers with 50 or more workers to grant eligible employees up to 12 weeks of unpaid, job-protected leave per year for qualifying family and medical reasons.

Child Care and Development Block Grant (CCDBG)

A federal block grant given to states to assist low-income families in accessing and paying for child care.

Head Start and Early Head Start

Federally funded community programs providing early learning, health, and developmental services to low-income preschool children and infants.

Child Tax Credit

A federal tax benefit that directly reduces federal income tax liabilities for qualifying families with dependent children.

Dependent Care Tax Credit

A federal tax credit designed to offset a portion of out-of-pocket expenses paid for child or dependent care needed to enable parents to work.