Aggregate Labor Force Participation Research Articles

Examining the Dynamics of Labour Force Participation, Carbon Dioxide Emission and Population Health in Sub-Saharan Africa

This study examined the dynamic causal relationship between population health, carbon dioxide (CO2) emission and labour force participation. The study employed the block exogeneity wald test after estimating a panel VAR model using data for 24 sub-Saharan African countries from 1990 to 2018. The dynamic interactions among the variables and effect of shocks was also examined using the variance decomposition analysis and impulse response functions. For robustness, the estimation was done using both aggregate labour force participation and disaggregated labour force participation inorder to investigate the differentials by gender. The results showed evidence of a feedback effect between life expectancy and total labour force participation. This also holds for male labour force participation however, a unidirectional causality was found from female labour force participation to life expectancy. A one standard deviation shock in CO2 emission had a negative impact on life expectancy. Life expectancy also had the greatest contribution to variations in CO2 emission. Male labour force participation shocks had a consistently negative impact over the ten-year period, however, shocks from female labour force participation had the least impacts on CO2 emission. Environmental reforms encouraging less polluting energy and technology use is important for CO2 emission reduction, which further increases life expectancy and ultimately labour force participation rates.

Patterns and Causes of Female Labor Force Participation: An Age–Period–Cohort Analysis for Pakistan

Female participation rates in Pakistan’s labor force are well below regional averages despite approximately 9 percent growth in the past three decades. To probe the underlying causes of the dynamics of female labor force participation in Pakistan, we use a synthetic panel constructed from nationally representative labor force surveys (1990–2017). The results indicate that the rising population share of working-age women does not account for changes in aggregate labor force participation rates. The age–period–cohort analysis demonstrates that for cohorts born since the 1900s, urban females’ age effects follow a slight M-shaped curve, representing the child-raising phase during which females reduce labor force participation. The cohort effects signal an increase in the labor force participation of cohorts born after the 1950s. This is particularly the case for married females and females with less education that traditionally have weaker attachments to the labor market due to social norms. Therefore, understanding and identifying the factors that can have an effect on the inhibiting role of social norms are central to devising policies to foster female labor force participation.

How Much Does Migration Affect Labor Supply in Europe? Methodological Insights and Contemporary Evidence from the European Union and Selected European Countries

In Europe, the slowdown in working-age population growth and population aging pose challenges, particularly vis-à-vis the current and future volume of labor supply. Throughout the 2010s, these demographic transformations took place against a backdrop of increasing migration flows and stocks. This IMR Research Note aims to enrich the discussion of the aforementioned issues and to provide methodological and empirical evidence on the role of migration stocks in shaping changes over time in two main aspects of the European labor supply: the size of the labor force and aggregate labor force participation rates from 2006 to 2018. Based on annual LFS data, we use a mixed standardization and decomposition method to determine to what extent trends in the European labor supply are driven over time by changes in population or in labor force participation rates within specific groups selected on the basis of age, gender, birth country (native- versus foreign-born), and origin country (European Union versus non-European Union). Our Research Note points out that, despite the upward trend in the labor force participation rates of native-born women and of native-born persons aged 55 years and over, the increase in labor supply in the European Union and in the 10 European countries under study in this article between 2006 and 2018 was driven by foreign-born persons. These developments suggest that, in a context of political desire for less migration, international migration has become a structural feature of European labor markets.

Down and up the “U” – A synthetic cohort (panel) analysis of female labor force participation in Turkey, 1988–2013

We study the aggregate labor force participation behavior of women over a 25-year period in Turkey using a synthetic panel approach. In our decomposition of age, year, and cohort effects, we use three APC models that have received close scrutiny of the demography community. The exercise is repeated by rural/urban status and by education to tease out some key differences in behavior. Our comparative methodology yields remarkably consistent profiles for most subsamples, but not all. Notably all methods reveal an M-shaped age profile attributable to child-bearing related interruptions in rural areas and for low-educated women in urban areas. We also find that younger cohorts among the least-educated women are more likely to participate, contrary to the belief that culture stands in the way. The evidence we compiled confirms that Turkey has reached the turning point of the U-shaped pattern in female labor force participation observed in countries where agriculture initially accounts for a large fraction of employment. We dwell on methodological issues throughout the paper and seek explanations for the occasional fragility of the methods. We establish that evolution of the linear trend present in the cross-section age profiles is responsible for the differences in the findings. Despite the apparent inconsistency, the models we use are consistent in recovering the turning points of the age, period, and cohort profiles.

Automation and labor force participation in advanced economies: Macro and micro evidence

Technological advances raise productivity and growth, but are also likely to reshape labor markets. We examine the impact of automation on aggregate labor force participation rates and individuals’ attachment to the workforce in advanced economies. Cross-country analysis, which leverages the variation in the routinizability of occupations and occupational composition, points to significant negative effects of automation on the participation rates of prime-age men and women. Individual-level analysis confirms that workers previously employed in routinizable occupations are more likely to drop out of the labor force. Encouragingly, higher spending on active labor market programs and education are, however, associated with smaller negative effects of technological change on participation.

Decomposing Changes in the Aggregate Labor Force Participation Rate

This paper presents a simple methodology for decomposing changes in the aggregate labor force participation rate (LFPR) over time into demographic group changes in labor force participation behavior and in population share. The purpose is to identify the relative importance of behavioral changes and population changes as driving forces behind changes in the aggregate LFPR.

Female Labor Force Participation in Turkey: A Synthetic Cohort (Panel) Analysis, 1988-2013

We study the aggregate labor force participation behavior of women over a 25-year period in Turkey using a synthetic panel approach. In our decomposition of age, year, and cohort effects, we use three APC models that have received close scrutiny of the demography community. We rely on predictions from just-identified models that render different methods comparable. The exercise is carried out by rural/urban status and by education to tease out some key differences in behavior, and to test hypotheses about the course of participation. Our comparative methodology yields remarkably consistent profiles for most subsamples, but not all. Notably all methods reveal an M-shaped age profile attributable to child-bearing related interruptions in rural areas and for low-educated women in urban areas. We also find that younger cohorts among the least-educated women are more likely to participate, contrary to the belief that culture stands in the way. This implies that the recent rise in the aggregate participation rates is not only due to a composition effect arising from increasing education levels. We also show that Turkey has reached the turning point of the U-shaped pattern in female participation. In addition, we dwell on methodological issues and offer explanations for the fragility of the methods. We establish that evolution of the linear trend present in the cross-section age profiles is responsible for the apparent differences in the findings.

Evolution of Behavior, Uncertainty, and the Difficulty of Predicting Labor Force Participation

This paper demonstrates the difficulty of forecasting labor force participation (LFP) rates by showing that a random walk does just as well as select sophisticated econometric models in predicting short-term aggregate LFP. Most efforts to improve forecasts of LFP focus on fine-tuning predictions of determinants (i.e., demographics and labor market conditions). However, we show that even perfect knowledge of future demographic trends and labor market conditions is not enough to overcome the additional difficulty posed by changes in behavior over time. Behavior in this paper refers to the way in which demographics and labor market conditions impact labor supply decisions (i.e., parameter coefficients).

Tax-benefit systems and differences in aggregate labour force participation: Comparative evidence from the Czech Republic and Hungary

This paper investigates the extent to which cross-country differences in aggregate participation rates can be explained by differences in tax-benefit systems. We take the example of two countries, the Czech Republic and Hungary, which – despite a lot of similarities – differ markedly in labour force participation rates. Using comparable individual-level labour supply estimates, we simulate how the aggregate participation rate would change in one country if the other country’s tax and social welfare system were adopted. The estimation results for the two countries are quite similar, suggesting that individual preferences are essentially identical in the two countries. The simulation results show that about one-third of the difference in the participation rates of the 15–74 year-old population and more than two-thirds of the participation of the prime-age population can be explained by differences in the tax-benefit systems.

Special working arrangements to allow for care responsibilities in Australia: availability, usage and barriers

Background Population ageing is projected to reduce labour force growth and aggregate labour force participation, whilst increasing demand for informal carers. Increasing the labour force participation of Australians who face barriers to employment (including carers) is part of the solution to labour market pressures occurring due to demographic change and may improve the financial wellbeing of carers. Aims To examine the availability, usage and barriers to accessing Special Working Arrangements (SWA) to provide care while employed in Australia. Data and methods The 2015 ABS Survey of Disability, Ageing and Carers was used to measure the prevalence of the availability, usage and barriers to SWA to care stratified by carer status and gender. Results About 94% of workers reported access to at least one type of SWA (n=25,094). Of this group, about 22% have used SWA to care in the last 6 months. The proportions using SWA to care were highest among primary carers (64%) followed by other carers (43%) and non-carers (19%). Of those who have used SWA, about 15% wanted to use additional SWA to care in the previous 6 months, but faced barriers in doing so, with higher proportions of primary carers (24.6%) and other carers (21.8%) reporting barriers. The main barriers faced by employed carers included insufficient paid leave and/or work commitments. Conclusions A range of paid and unpaid arrangements are necessary for carers to combine paid work with their caregiving responsibilities. Labour market legislation and workplace policies should be strengthened to reduce barriers to take up of SWA.

Aggregate Labor Force Participation and Unemployment and Demographic Trends

We estimate trends in the labor force participation (LFP) and unemployment rates for demographic groups differentiated by age, gender, and education, using a parsimonious statistical model of age, cohort and cycle effects. Based on the group trends, we construct trends for the aggregate LFP and unemployment rate. Important drivers of the aggregate LFP rate trend are demographic factors, with increasing educational attainment being important throughout the sample and ageing of the population becoming more important since 2000, and changes of groups' trend LFP rates, e.g. for women prior to 2000. The aggregate unemployment rate trend on the other hand is almost exclusively driven by demographic factors, with about equal contributions from an older and more educated population. Extrapolating the estimated trends using Census Bureau population forecasts and our own forecasts for educational shares, we project that over the next 10 years the trend LFP rate will decline to 61.1% from its 2018 value of 62.7%, and the trend unemployment rate will decline to 4.3% from its 2018 value of 4.7%.

Aggregate Labor Force Participation and Unemployment and Demographic Trends

We estimate trends in the labor force participation (LFP) and unemployment rates for demographic groups differentiated by age, gender, and education, using a parsimonious statistical model of age, cohort and cycle effects. Based on the group trends, we construct trends for the aggregate LFP and unemployment rate. Important drivers of the aggregate LFP rate trend are demographic factors, with increasing educational attainment being important throughout the sample and ageing of the population becoming more important since 2000, and changes of groups' trend LFP rates, e.g. for women prior to 2000. The aggregate unemployment rate trend on the other hand is almost exclusively driven by demographic factors, with about equal contributions from an older and more educated population. Extrapolating the estimated trends using Census Bureau population forecasts and our own forecasts for educational shares, we project that over the next 10 years the trend LFP rate will decline to 61.1% from its 2018 value of 62.7%, and the trend unemployment rate will decline to 4.3% from its 2018 value of 4.7%.

Aggregate Labor Force Participation and Unemployment and Demographic Trends

We estimate trends in the labor force participation (LFP) and unemployment rates for demographic groups differentiated by age, gender, and education, using a parsimonious statistical model of age, cohort and cycle effects. Based on the group trends, we construct trends for the aggregate LFP and unemployment rate. Important drivers of the aggregate LFP rate trend are demographic factors, with increasing educational attainment being important throughout the sample and ageing of the population becoming more important since 2000, and changes of groups' trend LFP rates, e.g. for women prior to 2000. The aggregate unemployment rate trend on the other hand is almost exclusively driven by demographic factors, with about equal contributions from an older and more educated population. Extrapolating the estimated trends using Census Bureau population forecasts and our own forecasts for educational shares, we project that over the next 10 years the trend LFP rate will decline to 61.1% from its 2018 value of 62.7%, and the trend unemployment rate will decline to 4.3% from its 2018 value of 4.7%.

Labor Force Participation and Educational Attainment in the United States

The objectives of this paper are twofold. Aggregate labor force participation rates in the United States are described focusing on educational attainment. A model is developed for decomposing aggregate labor force participation rates for men and women from 1994 to 2014 from a unique perspective by focusing on changes in educational attainment and on changes in the labor force behavior. The findings presented here indicate that men’s aggregate labor force participation rates declined during the 20-year period at all levels of educational attainment, due primarily to changes in population shares. A different picture emerges regarding women. For women with high school or some college or associate degree, it was changes in labor force behavior that dominated changing aggregate labor force participation rates. For women with the lowest and highest levels of educational attainment, less than high school or at least a baccalaureate degree, it was changes in their population shares that drove changes in aggregate labor force participation rates.

Where Have All the Workers Gone? An Inquiry into the Decline of the U.S. Labor Force Participation Rate.

The U.S. labor force participation rate has declined since 2007, primarily because of population aging and ongoing trends that preceded the Great Recession. The labor force participation rate has evolved differently, and for different reasons, across demographic groups. A rise in school enrollment has largely offset declining labor force participation for young workers since the 1990s. Labor force participation has been declining for prime age men for decades, and about half of prime age men who are not in the labor force may have a serious health condition that is a barrier to working. Nearly half of prime age men who are not in the labor force take pain medication on any given day; and in nearly two-thirds of these cases, they take prescription pain medication. Labor force participation has fallen more in U.S. counties where relatively more opioid pain medication is prescribed, causing the problem of depressed labor force participation and the opioid crisis to become intertwined. The labor force participation rate has stopped rising for cohorts of women born after 1960. Prime age men who are out of the labor force report that they experience notably low levels of emotional well-being throughout their days, and that they derive relatively little meaning from their daily activities. Employed women and women not in the labor force, by contrast, report similar levels of subjective well-being; but women not in the labor force who cite a reason other than "home responsibilities" as their main reason report notably low levels of emotional well-being. During the past decade, retirements have increased by about the same amount as aggregate labor force participation has.

Technical Progress and Early Retirement

This paper claims that technical progress induces early retirement of older workers. It presents a model where human capital is technology specific, so that technical progress erodes some existing human capital. This affects mostly older workers, who have a smaller incentive to learn the new technology, since their career horizon is shorter. Hence, they tend to work less. We find support to this erosion effect in HRS data, which shows that retirement and unemployment of older workers are positively related to technical progress in their sectors. Unlike the effect across sectors, the model is ambiguous about the aggregate effect of technical progress on labor supply of older workers. While in sectors with many innovations it falls due to the erosion effect, in other sectors it increases due to higher wages. To examine which effect dominates we run a time series test using US data and find that the rate of average technical progress reduces aggregate labor force participation by the old. Namely, the erosion effect dominates.

Population ageing and labour supply prospects in China from 2005 to 2050

Increased life expectancy and rapid fertility decline since the 1970s have combined to create a very rapid rate of population ageing in China. These demographic developments are expected to result in an ageing workforce and a significant slow-down in the growth of the working-age population. According to the United Nations medium variant population projection, the size of the working age population will increase only slightly over the next 10 years before beginning to shrink soon after 2020. Furthermore, since the participation rate of the elderly population is much lower than that of the prime-age labour force, ageing of the workforce will reduce the aggregate labour force participation rate (ALFPR).

A Cohort-Based Model of Labor Force Participation

The probability that an individual participates in the labor force declines precipitously beyond age 50. This feature of labor supply suggests that ongoing shifts in the age distribution of the population will put substantial downward pressure on the aggregate labor force participation rate. However, the aggregate rate is also influenced by trends within age groups. Neglecting to model both within-group influences and shifting population shares will doom any estimate of aggregate labor supply. We develop a model that identifies birth cohorts' propensities to participate, uses these propensities to derive age-specific trends in participation rates, and explicitly incorporates the influence of shifting population shares in estimating aggregate labor force participation.

A Cohort-Based Model of Labor Force Participation

The probability that an individual participates in the labor force declines precipitously beyond age 50. This feature of labor supply suggests that ongoing shifts in the age distribution of the population will put substantial downward pressure on the aggregate labor force participation rate. However, the aggregate rate is also influenced by trends within age groups. Neglecting to model both within-group influences and shifting population shares will doom any estimate of aggregate labor supply. We develop a model that identifies birth cohorts' propensities to participate, uses these propensities to derive age-specific trends in participation rates, and explicitly incorporates the influence of shifting population shares in estimating aggregate labor force participation.

Technical Progress and Early Retirement

This paper claims that technical progress induces early retirement of older workers. It presents a model where human capital is technology specific, so that technical progress erodes some existing human capital. This affects mostly older workers, who have a smaller incentive to learn the new technology, since their career horizon is shorter. Hence, they tend to work less. We find support to this erosion effect in HRS data, which shows that retirement and unemployment of older workers are positively related to technical progress in their sectors. Unlike the effect across sectors, the model is ambiguous about the aggregate effect of technical progress on labor supply of older workers. While in sectors with many innovations it falls due to the erosion effect, in other sectors it increases due to higher wages. To examine which effect dominates we run a time series test using US data and find that the rate of average technical progress reduces aggregate labor force participation by the old. Namely, the erosion effect dominates.