September 1998, Vol. 121, No. 9
Précis
Work, home,
and real life
Normal cycle or
new economy?
Counting
computers in today's economy
Union, skills,
and wage inequality
Workers often respond to the increasing challenges of today’s workplace by making changes at home, according to a recent Families and Work Institute study based on the 1997 National Study of the Changing Workforce. With 78 percent of married employees having partners who are also at work, roles at home are changing. Although women still spend more time on chores than men do—2.9 versus 2.1 hours a day—the gap has narrowed by about an hour and a half over the past 20 years. Also, while the amount of time employed mothers spend with their children—3.2 hours per workday—has remained roughly constant, the amount spent by fathers has risen by half an hour to 2.3 hours. Nevertheless, 7 in 10 parents feel they do not spend enough time with their children and both mothers and fathers report having less time for personal activities.
Ellen Galinski, co-author of the report and president of the Families and Work Institute says, " The bottom line is that employees today are trying to make it work, to restore balance in their lives. Male and female roles are starting to converge, and children are getting a little more time with their parents." The Institute’s report also echoes a recent Issues in Labor Statistics report, "Employer-sponsored Childcare Benefits," (BLS Summary 98–9) that noted that such benefits remain uncommon and are extended to about 1 of 25 workers in the United States.
The fact that productivity growth remained relatively high through 1997, after 6 years of expansion, led observers as diverse as the Council of Economic Advisors to the editorial board of Business Week to suggest that a permanent change in business cycle patterns may be underway. A recent Economic Commentary by Federal Reserve Bank of Cleveland economist Mark E. Schweitzer cautions, however, that dating expansions by looking at productivity growth or, conversely, using the age of an expansion to predict productivity growth, is a tricky business.
For one thing, there are, to a statistician, very few recoveries for which we have data on productivity—the BLS nonfarm business productivity measurement program has only had time to cover eight complete expansions since getting underway in 1947. The length of these expansions also has been quite variable, ranging from 12 to 106 months. Finally, the quarterly data on productivity growth contain a significant amount of variation, and thus require sophisticated "smoothing" before any pattern appears at all.
With these caveats in mind, Schweitzer suggests that the pattern of productivity growth thus in this recovery has been "essentially consistent with the previous eight." In fact, he points out that a relatively slow start to productivity growth in this expansion is more prominent than the relatively high growth rates in the later quarters.
Counting computers in today's economy
Computer technology is one of the mainstays of analyses of a new economy. One of the key channels through which computers affect the economy is business investment in computing equipment. Joseph H. Haimowitz writes in the second quarter 1998 Federal Reserve Bank of Kansas City Economic Review, "By all accounts, computers appear to be rapidly changing the way many of us conduct business, recreate, and communicate."
When Haimowitz does the math of conventional growth accounting, however, he describes the contribution of computing equipment as "modest." His article, "Has the surge in computer spending fundamentally changed the economy?" suggests that computer equipment contributed 0.31 percentage points to the average annual growth rate of GDP between 1972 and 1996.
Relaxing some of the classical assumption by allowing computers to generate positive externalities or to have higher rates of return than other capital goods, yields more substantial contributions. For the upper bound case of positive externalities—knowledge spillovers that not only increase the productivity of a specific firm but also increase the level of technology available across the entire economy—Haimowitz estimated a contribution roughly twice that of the standard case. "However," he concludes, "in both the standard and the modified frameworks there is no evidence that the contribution of computers to economic growth is any greater now than it was in the late 1970s."
Unions, skills, and wage inequality
Most studies of wage inequality in the United States attribute at least some of any increase in inequality to declines in the share of the work force that is represented by a labor union. David Card, in a working paper entitled Falling Union Membership and Rising Wage Inequality: What’s the Connection?, extends such analyses by explicitly considering the way unionization rates vary across the wage distribution and for the differing impact unionization has on more- and less-skilled workers.
He finds that although estimates of the magnitude of the equalizing effect of unionization are lessened among male workers, the decline in unionization might still account for 10 percent to 20 percent of the increase in their wage inequality. In part because the decline in their unionization rate has been relatively small, shifts in unionization account for very little of the overall rise in the inequality of wages among women.
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