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"Labor Force Participation, Wage Rates, and Money Illusion," The Review of Economics and Statistics, May 1971, 164-168.
pdf file (453KB).



This paper uses time series data to examine the effects of wage rates on labor force participation. It does appear that wage rate effects can be picked up for some age-sex groups. In a recent study, 1997#1, Diane Macunovich and I have examined the labor force participation of women 20-24, again using time series data. This work also picks up significant wage rate effects. Although there is a limit to the information that can be gleaned from time series data, the results in these two papers appear to provide some support to the hypothesis that wage rates affect labor force participation over time.