| This dissertation uses the FTFY participation rate as an alternative measure of the labor supply. The full-time-and-full year (FTFY) participation rate decreased from 1967 to 1982, while it begins increasing after that. Meanwhile, the part-time and/or part year (PT and/or PY) participation rate first increased, then decreased, and was accompanied by an increasing trend in the not-working rate. Thus, I determine whether the increase in FTFY participation rates could be caused by a rise in labor supply. If labor supply rose, what triggered this increase?; The initial finding is that the supply of labor rose conditioned on wages. The rise in labor supply is mainly concentrated in low wage groups. This coincides with the idea that less skilled workers are more vulnerable to business cycles than skilled workers. After removing the cyclical effects, I find that the labor supply of workers located in the low wage groups rose after 1982.; Because of the rising cost of health insurance since 1980, employer provided health insurance in the work place represents one important factor that influences the labor market location choice to a worker. In addition, there exists a discrepancy between FTFY and FTPY participation statuses in availability of employer provided health insurance. A full time worker's probability of having employer provided health insurance is a function of time spent in the labor market and given the probability function over time, rising benefits of employer provided health insurance cause a rise in the labor supply. The data shows that the real benefits from employer provided health insurance increase 54% from 1979 to 2000. Empirically, I find that the increase in benefits from employer provided health insurance explains a major part of the increasing labor supply.; There are two major findings in this dissertation. First, the movement of wages alone suggests that the labor supply rose over the past two decades. Second, if the benefits from employer provided health insurance are included as part of a more broadly defined compensation, then the data is consistent with a static labor supply. |
