Declining labor force attachment and downward trends in unemployment and participation

Régis Barnichon and Andrew Figura

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

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- 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: 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: 2013-10
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 (2015)
Working Paper: Declining Labor Force Attachment and Downward Trends in Unemployment and Participation (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1397

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