Changes in Labor Market Participation across the Household Income Distribution

Nicolas Petrosky-Nadeau and Robert Hall ()
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Nicolas Petrosky-Nadeau: FRB San Francisco

No 1640, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: Since the start of the Great Recession, there has been a substantial decline in the rate of labor force participation (LFPR). A novel contribution of our approach is to examine how this decline varies across the distribution of household income. Using the SIPP, we find that almost all of the decline in the LFPR of 25- to 54-year olds can be attributed to declining participation by individuals in households in the upper half of the household income distribution. The result that the decline in prime-age LFPR is concentrated in higher- income households continues a trend that started as early as 2001, and is strongest for men. We find similar patterns among 16 to 24 year-olds, and no significant difference across household income for the population over 55.

Date: 2017
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