WAS SEVENTIES STAGFLATION really the fault of the Baby Boomers?

Steve Waldman suggested a few posts back that the Great Inflation was a reasonable response to the Baby Boomers entrance into the workforce. The economy could not absorb all of those workers at prevailing real wages and so real wages had to be driven down to maintain full employment. Folks attacked this argument from a number of levels, but I was somewhat sympathetic because I tend to think far little attention has been paid to the rapid increase in the work force due to the entrance of baby boomers and women. Economists are so sensitive to any argument against immigration they seem to forget that any growth model that I am aware of will predict a decline in per capita GDP if the population rises fast enough.

There isn’t enough capital to go around – buildings, equipment, roads, etc – and it is simply inefficient to try to build it all overnight. . . . Since you know the size of the workforce, if you simply assume that productivity grows at its long run trend then you can get a rough and ready estimate of potential GDP in real time. That is, of course, unless some weird event totally skews the path of productivity growth. Some event like say, the massive entrance of baby boomers and women into the workforce. So, in real time an analyst might see the labor force growing by 4.5%, tack on a 2% for productivity and say that the economy should be on average growing at a real rate of 6.5% per year.

So, if you see real growth rates stubbornly stuck in the same band around 5%, that had existed prior to the rapid expansion of the labor force then then natural conclusion is that the economy is operating under capacity.

Hmm. What about the effect of women flooding into the workforce? Does that make things better, or worse, in this analysis?