Declining Labor Force Attachment and Downward Trends in Unemployment and Participation

Andrew Figura and Régis Barnichon

No 728, Working Papers from Barcelona School of Economics

Abstract: The US labor market witnessed two apparently unrelated secular movements in the last 30 years: a decline in unemployment between the early 1980s and the early 2000s, and a decline in participation since the early 2000s. Using CPS micro data and a stock- ‡ow accounting framework, we show that a substantial, and hitherto unnoticed, factor behind both trends is a decline in the share of nonparticipants who are at the margin of participation. A lower share of marginal nonparticipants implies a lower unemployment rate, because marginal nonparticipants enter the labor force mostly through unemployment, while other nonparticipants enter the labor force mostly through employment.

Keywords: marginal participant; want a job; stock-flow decomposition (search for similar items in EconPapers)
JEL-codes: E24 J6 (search for similar items in EconPapers)
Date: 2015-09
New Economics Papers: this item is included in nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Working Paper: Declining Labor Force Attachment and Downward Trends in Unemployment and Participation (2013)
Working Paper: Declining labor force attachment and downward trends in unemployment and participation (2013)
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