Decline In Labor Force Participation Research Articles

Physiological aging and life-cycle labor supply across countries.

We construct a cohort-based frailty index for 180 countries over the period 1990-2019. We use this measure of physiological aging to estimate the impact of deteriorating health on labor force participation. Our three-dimensional panel framework, in which the unit of observation is a cohort in a given country at a given age, allows us to control for a range of unobserved factors. Our identification strategy further exploits a compensating law of physiological aging to account for reverse causality. We find a negative effect of physiological aging on labor market participation: an increase of the frailty index by one percent leads to a reduction of labor force participation of about 0.6 (±0.2) percentage points. Since health deficits (in the frailty index) are accumulated at a rate of about 3 percent per year of life, almost all of the age-related decline in labor force participation can be motivated by deteriorating health.

Housing demolition and labour force participation: A gender difference perspective

AbstractExisting research suggests that housing demolition negatively affects labour supply through the wealth effect of the demolition compensation. However, there is limited research on the gender differences in the impact of housing demolition on labour force participation. This study investigates the effects of housing demolition on labour force participation, with a specific focus on the gender difference. Using data from the Chinese Family Panel Studies, this study reveals a significant decline in labour force participation resulting from housing demolition, primarily driven by females. Moreover, housing demolition exerts a stronger effect on the labour force participation of married women, who tend to take on more responsibilities for household chores, while its impact on married men is less evident. These findings offer valuable insights into the issue of labour shortage and underscore the importance of reducing the traditional gender‐based division of household labour.

Robots and Non-Participation in the Us: Where Have All the Workers Gone?

I analyze the impact of one of the leading automation technologies of the last decades – industrial robots – on the declining labor force participation in the US. Exploiting exogenous variation in the adoption of robots across local labor markets and over time, I find that, on average, one additional robot drives two workers out of the labor force. The massive increase in robot adoption between the mid-1990s and 2014 explains about 15 percent of the decline in labor force participation in these years. I next investigate the channels through which automation affects nonparticipation and find that robot adoption leads to rising university enrollment rates among the young, early retirement of older workers and a considerable fraction of middle-aged workers enrolling in disability insurance.

Missing Men? Precarity and Declining Labor Force Participation Among Working-Class Men

Recent research has noted declining labor force participation among working class men in the United States, but with little attention to the mechanisms underlying such withdrawal. In this article—drawing on in-depth interviews with 61 working-class men from rural Pennsylvania—I address this gap in the literature by prodding respondents on the sequential character of their employment experiences, their perceived vulnerabilities, and the calculations they make in the contexts in which they live. Findings reveal fluctuations in their engagement with work, something I refer to as participation churn. However, respondents’ labor force narratives also show how they adapt to local employment conditions and personal circumstances, a phenomenon referred to as adaptive nonparticipation. The results highlight key mechanisms underlying labor force dropout and have implications for how declining labor force participation should be understood. These findings advance the sociological understanding of how workers—even in precarious positions—assert agency.

Pension incentives and labor supply: Evidence from the introduction of universal old-age assistance in the UK

We study the labor supply implications of the Old-Age Pension Act (OPA) of 1908, which, for the first time, provided pensions to older people in the UK. Using recently released census data covering the entire population, we exploit variation at the newly created age-based eligibility threshold. Our results show a considerable and abrupt decline in labor force participation of 6.0 percentage points (13%) when older workers reach the eligibility age of 70. To mitigate the impact of population aging today, pension reforms aimed at increasing elderly labor supply, however, have to induce much larger behavioral responses than the OPA.

Chronic Diseases and Labor Force Participation Among Presenile and Senile Chinese.

Background: The incidence of chronic diseases has increased dramatically due to rapid aging and lifestyle changes of China in recent decades. The population aged more than 45 years is an important participant in the labor force market, and the health status directly affects their labor force participation decision. This study aims to explore the relationship between chronic diseases and the labor force participation among the elderly Chinese population aged more than 45 years.Method: We employ a multivariate probit (MVP) model to construct five structural equations for an analysis. The advantage of this model is that it can deal with the endogeneity of chronic diseases.Results: Firstly, compared with the elderly, younger people are more likely to participate in the labor force market; the influence of chronic diseases is the largest for presenile women in the decision-making of labor force participation; the impact of psychological problems on labor force participation cannot be ignored, especially for men aged more than 45 years. In addition, sociodemographic factors such as geographical location and marital status also have direct effects on the probability of labor force participation while the impact of both family wealth and family number is much smaller. Finally, unhealthy lifestyles through chronic diseases have negative and indirect marginal effects on labor force participation.Conclusions: This article proves that chronic diseases have a negative impact on the labor force participation for Chinese aged more than 45 years. The public should give more tolerance and opportunities to these groups. The population aged more than 45 years are more vulnerable and face more psychological problems, which will lead to a decline in labor force participation. Psychological health counseling and services are urgently needed. As the urban areas enjoy more social welfare, Chinese welfare policy needs to be tilted toward the rural elderly. For individuals, maintaining healthy lifestyles can help you stay away from chronic diseases and stay in the labor force market.

Estimating Hysteresis Effects

In this paper we identify demand shocks that can have a permanent effect on output through hysteresis effects. We call these shocks permanent demand shocks. They are found to be quantitatively important in the United States, in particular when the Great Recession is included in the sample. Recessions driven by permanent demand shocks lead to a permanent decline in employment and investment, while output per worker is largely unaffected. We find strong evidence that hysteresis transmits through a rise in long-term unemployment and a decline in labor force participation and disproportionately affects the least productive workers.

Revisiting the Shift in Youth Labour Market vis-à-vis the Economic Development in India

The significance of youth in the economic development of a nation is well comprehended, while the role of economic transformation in ensuring a successful School-to-Work transition for the younger generation has remained a solemn challenge, especially for the developing countries. Therefore, the objective of this study is to understand School-to-Work transition among the younger generation, considering key indicators of the Indian labour market during the post-reforms period. The findings implicate specific enigmatic changes in the labour market—despite decent economic growth, the declining labour force participation, declining employment and increasing unemployment across gender and sector persist as a significant challenge to a thriving School-to-Work transition for the younger population of the country. Youth—being the prospective human capital—remains highly vulnerable in the Indian labour market, and prospects for their transition in the labour market are skimpy and shrinking, while the challenges remain multidimensional.

Pension Incentives and Labor Supply: Evidence from the Introduction of Universal Old-Age Assistance in the UK

We study the labor supply implications of the Old-Age Pension Act (OPA) of 1908, which, for the first time, provided pensions to older people in the UK. Using recently released census data covering the entire population, we exploit variation at the newly created age-based eligibility threshold. Our results show a considerable and abrupt decline in labor force participation of 6.0 percentage points (13%) when older workers reach the eligibility age of 70. To mitigate the impact of population aging today, pension reforms aimed at increasing elderly labor supply, however, have to induce much larger behavioral responses than the OPA.

Dropping Out, Being Pushed Out or Can't Get in? Decoding Declining Labour Force Participation of Indian Women

The stubbornly low and declining level of labor force participation rate (LFPR) of Indian women has prompted a great deal of attention with a focus on factors con- straining women’s labour supply. Using 12 rounds of a high frequency household panel survey, we demonstrate volatility in Indian women’s labour market engagement, as they exit and (re)enter the labor force multiple times over short period for reasons unrelated to marriage, child-birth, or change in household income. We demonstrate how these frequent transitions exacerbate the issue of measurement of female LFPR. Women elsewhere in the world face a “motherhood penalty†in the form of adverse labour market outcomes after the first childbirth. We evaluate the motherhood penalty in the Indian context and find that mothers with new children have a lower base level of LFPR, but there is no sharp decline around the time of childbirth. Blinder-Oaxaca decomposition of determinants of female LFPR suggests that none of the total fall (10 percentage points) in our study period is explained by a change in supply-side demo- graphic characteristics. We suggest that frequent transitions, as well as fall in LFPR, are consistent with the demand-side constraints, viz., that women’s participation is falling due unavailability of steady gainful employment. The high unemployment rate and industry-wise composition of total employment provide suggestive evidence that women’s participation is falling as women are likely to be displaced from employment by male workers. We show that women’s employment is likely to suffer more than men’s due to negative economic shocks, as was seen during the fallout of demonetisation of 86 percent of Indian currency in 2016. Our analysis contests the prominent narrative that women are voluntarily dropping out of the labor force due to an increase in household income and conservative social norms. Our results suggest that India needs to focus more on creating jobs for women to retain them in the labor force.

Robots and Nonparticipation in the US: Where Have All the Displaced Workers Gone?

This paper analyzes the impact of one of the leading automation technologies of the last decades, industrial robots, on the declining labor force participation in the US. Exploiting exogenous variation in the adoption of robots across local labor markets and over time, I find that, on average, one additional robot drives two workers out of the labor force. Despite the adverse impact of robots, there is no evidence that displaced workers are migrating away from exposed labor markets or that labor force dropouts have been compensated by the labor force participation of a family member. Instead, I find that robot adoption leads to rising enrollment in post-secondary education institutions among young individuals, early retirement of older workers and a considerable fraction of middle-aged workers enrolling in disability insurance.

Assessing the Impact of Education and Marriage on Labor Market Exit Decisions of Women

Working Paper 2010-2 February 2010 Abstract: During the late 1990s, the convergence of women's labor force participation rates to men's rates came to a halt. This paper explores the degree to which the role of education and marriage in women's labor supply decisions also changed over this time period. Specifically, this paper investigates women's decisions to exit the labor market upon the birth of a child. The results indicate that changing exit behavior among married, educated women at this period in their lives was not likely the driving force behind the aggregate changes seen in labor force participation. Rather, changes in exit rates among single women, particularly those less educated, are much more consistent with the changing pattern of aggregate female labor force participation. JEL classification: J22, J11 Key words: labor force participation, labor supply, labor market exit, opt administrative data I. Introduction and Background In the late 1990s, the steady march of women's labor force participation rates towards convergence with those of men came to a halt. There is no consensus in the literature as to the source of this change in labor force patterns, although much of the attention has focused on the behavior of married and highly educated women, especially those with children (e.g., Cohany and Sok 2007). The analysis in this paper will focus on the role marriage and education play in women's decisions to exit the labor market at a time of major transition--the birth of a child--and how the importance of those factors changed during the 1990s. The relevance of investigating exit decisions arises from the attention some literature has given to the notion that women, particularly married and educated women, are opting out, meaning they were previously attached to the labor market and are increasingly choosing to exit (Boushey 2005 and Goldin 2006). Many have identified that the recent decline in labor force participation rates of women has been concentrated among highly educated women with young children (Goldin 2006, Bradbury and Katz 2005). Others have identified both characteristics and behavior (e.g., Reimers and Stone 2007 and Hotchkiss 2006), as well as strength of the labor market (Boushey 2005), as contributors to the observed decline in labor force participation. If the declining labor force participation rates among women can be tied to changes in behavior among married and educated women, one would expect to see those behavioral changes reflected in decisions made during a particularly transitional period in women's lives. The birth of a child has been found to have a profound impact on the decision of women to exit the labor market, even among very highly educated women (Herr and Wolfram 2009). Figure 1 shows the incidence of women exiting the workforce after giving birth, based on the data used in this analysis. The exit rate flattened in the late 1990s and then began increasing in 2000 (with a slight down tick in 2002, which is the last year of available birth data). This exit pattern is consistent with the flattening out and subsequent decline of the national labor force participation rates of women which began in the late 1990s, also shown in the figure. [Figure 1 here] The analysis in this paper covers the period 1994-2002, and combines vital statistics birth information with employment data in order to capture information on the immediate factors that affect decisions to exit the workforce at time of birth, including information on the mother and child's health, the characteristics of the mother's industry and firm, and the mother's employment history. We find that the impact of marriage and education on exit decisions did change through the 1990s, but not in a way that would be expected, given the focus on the behavior of married, educated women. As it turns the exit pattern depicted in Figure 1 was driven by changing behavior of single women, both high school and college educated. …

A Closer Look at Nonparticipants during and after the Great Recession

This paper uses matched individual-level data from the Current Population Survey to determine that around the 2008 recession, there was a significant upward shift in trend of the share of labor force leavers giving Schooling and Other as the reason for absence from the labor market. This trend shift is observed primarily among workers between the ages of 25 and 54 and is widespread across all educational groups with at least a high school degree. In addition, the upward shift in the trend of the schooling reason share occurred among workers previously employed in occupations and industries with varying degrees of job losses during the recession. This shift suggests it was a widespread phenomenon and not isolated among sectors or occupations that suffered the most during the recession. The implication is that the upward shift in the schooling reason share has more likely been a response to lower opportunity costs of schooling during economic downturns rather than the result of workers trying to overcome skill mismatch in the labor market. In addition, since transition rates to the labor force are highest among those giving Schooling and Other as reasons for absence, the decline in labor force participation since 2008 is likely more transitory than permanent.

The missing obese men? Labour force participation and obesity among prime-age men in the United States

The declining labour force participation among men between the ages 25 and 54 in the United State has attracted the attention of policymakers and the public. I document this trend by obesity status during the period 1990–2016 using the Behavioural Risk Factor Surveillance System Survey. I find that the likelihood of being out of the labour force has been increasing by approximately 0.22 percentage points every year on average for non-obese men, while that of obese men has been increasing by approximately 0.28 percentage points. This indicates that the difference in the propensity to be out of the labour force has widened by 1.6 percentage points between the obese and the non-obese during 1990–2016. It seems that the labour force participation gap between obese men and non-obese men started to increase during the housing bubble period, 2001–2007. The difference in the trends seems to be driven by non-Hispanic whites, men without a college degree, and men aged 25–44.

The Problem of US Labor Force Participation

Despite more robust growth than many advanced economies in Europe and Asia, labor force participation in the United States between 1995 and 2017 was weak. In other countries, job loss has manifested itself as increased unemployment as opposed to labor force exit. For men, the decline in labor force participation appears to be partly structural, as it is common across countries, and partly related to disability. For women, disability was an even more important contributor to the decline in their labor force participation, explaining nearly two-thirds of the decline in labor force participation of prime-aged workers.

Improving Employment and Earnings in 21st Century Labor Markets: An Introduction

What are the prospects for improving the lot of US workers in the 21st century? This introduction to the topic examines the most important US labor market trends of the late 20th and early 21st centuries, considers their causes and likely future trends; and then explores policies that might improve these outcomes. The most important broad labor market trends in recent decades have been: 1) Modest real wage growth; 2) Rising earnings inequality; and 3) Declining labor force participation, recently among both men and women, but especially among less-educated or African-American men and low-income youth over several decades. Key causes of these trends include labor demand and supply factors (such as automation, immigration, and limited college attainment); changing labor market institutions (such as declining unionism and stagnant federal wage/hours laws); rising alternative staffing arrangements, informal work and fissuring; and uneven labor market progress and policies affecting women, African-Americans and the young. After that review, we summarize what the papers in our volume tell us about the public policies that could help improve outcomes for US workers. The main message is that further deterioration in many US workers' lives in the 21st century likely requires public and employer policy changes to help to translate the forces at work into better outcomes for them.

Why Did Indian Female Labor Force Participation Decline?: Evidence From a Model of Household Labor Supply

Between 1983 and 2011, Indian married women's labor force participation (LFP) declined from 35% to 24%, even while the economy grew, educational attainment rose, and fertility fell. To study this decline in LFP, I use India's National Sample Survey to construct a unique sample of matched husband-wife pairs. The economics of household labor supply suggests that the explanation may lie in husbands' incomes that exert a negative income effect on wives' LFP. Two-stage least squares estimates of a model of household labor supply reveal positive wives' own-wage elasticities, from 0.25 in 1983 to 0.67 in 2011, and negative cross-wage elasticities, rising from -0.54 in 1983 to -0.75 in 2011. Estimating the model for the period as a whole, trends in wives' wages imply an increase in women's LFP of 8.6 percentage points, and trends in husbands' wages imply a decrease of 20.8 percentage points, for an overall decline of 12.2 percentage points.

Does a lower (higher) labour force participation rate imply greater (lower) income tax evasion? An exploratory empirical inquiry for the U.S.

ABSTRACTThis exploratory study seeks to add to the income tax evasion literature by investigating a heretofore ignored potential determinant of aggregate federal personal income tax evasion in the U.S., namely, the labour force participation rate. It is hypothesized that the higher (lower) the labour force participation rate, the lower (greater) the degree of tax evasion. The empirical estimation supports this hypothesis, finding that a one unit (one percentage point) increase (decrease) in the labour force participation rate leads to a 9.1% decrease (increase) in income tax evasion. Thus, the declining labour force participation in recent years implies increased tax evasion problems for the U.S.

WHY ARE U.S. WOMEN DECREASING THEIR LABOR FORCE PARTICIPATION IF THEIR WAGES ARE RISING?

Given the traditional interpretation of women's labor force participation rate (LFPR) trends as movements along a positively sloped labor supply curve, it is surprising that the recent downward trend in U.S. women's LFPR has occurred over a period when women's real wages were commonly believed to be rising. I find that almost two‐thirds of the decline since 2000 is attributable to aging of the adult female population. The remainder, due to declining labor force participation for women under 55, becomes less puzzling in light of my evidence that the wage/education locus faced by women actually may have worsened since 2000. (JEL J21, J31, J82)

The Decline in the Labour Force Participation of Rural Women in India: Taking a Long-Run View

The significant fall in the labour force participation of rural women between 2004 and 2011 has been an issue that has generated considerable academic interest. In this paper, the authors look at thirty years of comparable NSS data from 1983 to 2011 of rural women’s participation in the labour force using a variety of definitions of female labour force participation that capture both market and non-market work. The authors find a long-term slow decline in the participation of rural women in wage work and self-employment, especially among dalit and adivasi women in poor agricultural labourer households. The more recent sharp decline in female labour force participation (FLP) in 2004–2011 has occurred both in market and non-market work, and across most categories of economically active women. Our analysis highlights the somewhat contradictory behaviour of rural FLP across different definitions and time periods, and across different correlates of female labour force participation, and suggests that more complex factors are at work than has usually been discussed in the literature.