Interpreting the recent decline in labor force participation

Willem Van Zandweghe

Economic Review, 2012, vol. 97, issue Q I, 5-34

Abstract: At the turn of the 21st century, labor force participation in the United States reversed its decades-long increase and started trending lower. In the four years since the start of the recent recession, the labor force participation rate experienced a far bigger drop than in any previous four-year period. ; To disentangle the roles of long-term trend factors?such as demographic shifts?and the recession in the recent drop in participation, Van Zandweghe examines a variety of evidence, including data on demographic shifts, labor market flows, gender differences, and the effects of long-term unemployment. ; The evidence indicates that long-term trend factors account for about half of the recent decline in labor force participation, with the recession accounting for the other half.

Date: 2012
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