Declining Labor Force Attachment and Downward Trends in Unemployment and Participation

Régis Barnichon and Andrew Figura
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Andrew Figura: https://www.federalreserve.gov/econres/andrew-figura.htm

No 2013-88, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: The U.S. 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-flow 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: Unemployment rate; labor force participation rate; individuals marginally attached to the labor force (search for similar items in EconPapers)
JEL-codes: E24 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2013-10-01
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 (5)

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Related works:
Working Paper: Declining Labor Force Attachment and Downward Trends in Unemployment and Participation (2015)
Working Paper: Declining labor force attachment and downward trends in unemployment and participation (2013)
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