Understanding the Decline in the Labor Force Participation of Teenagers

Abstract

In the current recovery, an anomaly is that the decline in the unemployment rate appears to be a result of declining labor force participation rather than of an increase in the employment-population ratio. An examination of the changes in labor force participation rates demonstrates both that overall labor force participation has declined and that the age group with the largest decline in participation is teenagers (ages 16 - 19). A large and rapid decline in teen LFPR accounts for about half the total decline in labor force participation. This paper examines the changes in teen labor force participation and finds that about 40% the decline in teen labor force participation can be explained by changes in teen school enrollment rates and in teen unemployment rates. I also find that teen LFPRs since 2000 have been significantly below their predicted level.