The following table shows the labor market data for the U.S. working age population for 2022. The data are from the Bureau of Labor Statistics (I have made slight modifications to some of the numbers in order to get nice ratios). Civilian non-institutional population Civilian labor force Men 25 to 54 Years old 63,122,000 55,900,843 Women 25 to 54 Years old 64,039,000 48,934,000 Here is the issue. In the United States childcare services are very expensive: about $10,000 to $15,000 per child per year, d
The following table shows the labor market data for the U.S. working age population for 2022. The data are from the Bureau of Labor Statistics (I have made slight modifications to some of the numbers in order to get nice ratios).
| Civilian non-institutional population |
Civilian labor force | |
| Men 25 to 54 Years old | 63,122,000 | 55,900,843 |
| Women 25 to 54 Years old | 64,039,000 | 48,934,000 |
Here is the issue. In the United States childcare services are very expensive: about $10,000 to $15,000 per child per year, depending on the state. This means that a low-income family with two kids and an annual income of, say $40,000, has to pay 50% to 75% of its income to childcare. Many women who cannot afford such expensive childcare services have to stay home to take care of their kids. This is one reason (but not the only one) that keeps women out of the labor force.
For the sake of this exercise let's assume that high childcare costs are the only reasons for low women's participation rates. A more accurate analysis has been conducted by some economists at the St. Louis Federal Reserve Bank, hereLinks to an external site..
One policy option to address this issue is to provide financial subsidies to low-income families to make childcare more affordable. Another option is to provide subsidies to employers to establish and operate childcare facilities for their employees. These options are constantly studied by legislators. So let' do some number crunching.
The above data show that men's participation in labor force is.... percent while women's participation rate is...percent. The overall participation rate for this group of population (men and women combined) is.... percent.
Suppose that through some economic policy we could increase the women's labor-force participation rate to equal that of men. This policy would increase the number of women in labor force by.... persons and the overall participation rate would increase to ....percent.
Food for thought: What would be the benefit of this policy for the society?
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