|Welcome back the 90s. Did you miss us?|
It's my understanding that the fashion today among the millennial generation (1980-2000) is to call yourself a 90s kid if you were born in the 90s, but the reality is that the people born in the latter half of the 90s would have no real memories of the time . It's all pretty funny as I see the kids today on my lawn sporting 90s fashions. I gave the kid my old box of round sunglasses in every color. As a 70s kid by the millennial metric, I spent my formative years in the 90s. This makes any assertions I have about the period immediately suspect — both being prone to being overly nostalgic for or traumatized by events of the era. For example, the baby boomer economic pundit class of today can be seen as being traumatized by the high inflation of the 70s and so remain oddly preoccupied with it even in an environment of sub-2% inflation.
With that caveat, I wanted to collect in one place several economic trends that changed in the 90s that I've noticed or blogged about. I am exploring as a major theme of my forthcoming book what happened. My thesis is that that there was a major social change underway in the US in the 70s that effectively comes to an end by the 90s — women entering the workforce peaks in the 70s and reaches a new equilibrium by the 90s, which is closely matched by white flight that emerges with the civil rights movement. I believe that these trends had observable effects in many economic time series. Also, this list is intended to be updated — leave a comment if you find some data where the trend changes in or around the 1990s.
What changed: Phillips curve, women's employment-population ratio, men's self-citations
This post (and this follow up) lays out my hypothesis that the Phillips curve was an epiphenomenon of the rise in women's labor force participation. However, it also touches on one social change — men's self-citation in academic literature — that might have been caused by the increasing number of women in academia. By the 90s, women's employment-population ratio, the Phillips curve, and self-citations reach new equilibria (correlated with men's at a lower level, zero slope, and ~1.6 times the level of self-citations by women, respectively).
What changed: Recessions (?)
Related to the fading of the Phillips curve, the 90s sees the beginning of what I call the "asset bubble era" where recessions seem to be governed by the rise and fall of asset bubbles ("dot-com", and the housing bubble) as opposed to the more cyclic fluctuations of inflation and employment of the "Phillips curve era".
What changed: Long term unemployment
Until the 1990s, the fraction of the unemployed that have been unemployed for 27 weeks or longer ("long term unemployment", here) basically followed the unemployment rate with a surge during a recession and catch-up decline through the recovery. After the 90s, recessions start causing cumulative increases in the long term unemployed as the catch-up decline in the faction faded away. I don't have any hypothesis as to the cause here, except to say that it's undoubtedly related to the overall change in the 90s.
What changed: Unionization, inequality, labor share, manufacturing employment
In this post, I try my hand at divining causality among women entering the workforce, manufacturing declining, labor share declining, unionization declining, and inequality rising. They happen basically in that order and have mostly completed their transitions to their new equilibria by the end of the 90s.
What changed: The dynamics of consumption relative to investment
In this post, I noticed that while the ratio of consumption to investment follows a pretty normal cycle well-described by a dynamic information equilibrium model starting the late 80s and early 90s, the period before appears to be just noise with a slight downward trend (which is similar to housing prices discussed below).
What changed: Immigration
In this post that's mostly about the Great Recession, I point out that immigration from Mexico changes from increasing during the 90s to declining after the 90s. My speculation was that increasing xenophobia might have caused a slowdown in economic growth contributing to the Great Recession.
What changed: Housing price dynamics
Although I don't show it in the post , the longer term Case-Shiller index is relatively flat (or at least averages to flat) before the 70s. And much like consumption-to-investment ratio above, the dynamic equilibrium process doesn't become really clear until the 80s and 90s. But one of the other things that happens is that until the 90s, this pattern follows the business cycle — falling with recessions. However, while e.g. wage growth takes a dive in the 2000s recession, housing prices don't which contributes to the housing affordability crisis we're experiencing today. My hypothesis is that this has something to do with white flight fading out and the gentrification process kicking in — the new segregation after de jure segregation and redlining.
Women's employment in manufacturing
What changed: Fraction of women employed in manufacturing
In researching my upcoming book, I found a striking statistic. In the 90s, the fraction of women in manufacturing employment — which had been increasing since the 1960s — started declining precipitously. It returned a level not seen since the 1960s after the Great Recession. Now at less than 30%, it is one of the most gender-asymmetric sectors.
 Actually, what we think of as "the 90s" is really a period from 1988 to 1998, much like how "the 80s" is really a period from 1977 (or this) to 1987. At least in the US. By video game consoles, we also have the 90s being 1988 to 1997 and the 80s being 1977 to 1986. There's really no arguing against it.
 It's here (blue) along with the model (green) for the period from the 70s to the present (click to enlarge). Aside from the spike right after WWII, there's really just noise.