Decline In Labor Force Participation Research Articles

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.

The Disappointing Recovery of Output after 2009

U.S. output has expanded only slowly since the recession trough in 2009, even though the unemployment rate has essentially returned to a precrisis, normal level. We use a growth-accounting decomposition to explore explanations for the output shortfall, giving full treatment to cyclical effects that, given the depth of the recession, should have implied unusually fast growth. We find that the growth shortfall has almost entirely reflected two factors: the slow growth of total factor productivity, and the decline in labor force participation. Both factors reflect powerful adverse forces that are largely unrelated to the financial crisis and recession—and that were in play before the recession.

The Disappointing Recovery of Output after 2009

U.S. output has expanded only slowly since the recession trough in 2009, even though the unemployment rate has essentially returned to a precrisis, normal level. We use a growth-accounting decomposition to explore explanations for the output shortfall, giving full treatment to cyclical effects that, given the depth of the recession, should have implied unusually fast growth. We find that the growth shortfall has almost entirely reflected two factors: the slow growth of total factor productivity, and the decline in labor force participation. Both factors reflect powerful adverse forces that are largely unrelated to the financial crisis and recession?and that were in play before the recession.

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.

Welfare Reform and Labor Force Exit by Young, Low-Skilled Single Males.

While the labor market woes of low-skilled male workers in the United States over the past several decades have been well documented, the academic literature identifying causal factors leading to declines in labor force participation (LFP) by young, low-skilled males remains scant. To address this gap, I use the timing and characteristics of welfare-reform policies implemented during the 1990s and fixed-effects, instrumental variable regression modeling to show that policies seeking to increase LFP rates for low-skilled single mothers inadvertently led to labor force exit by young, low-skilled single males. Using data from the Current Population Survey and a bundle of work inducements enacted by states throughout the 1990s as exogenous variation in a quasi-experimental design, I find that the roughly 10 percentage point increase in LFP for low-skilled single mothers facilitated by welfare reform resulted in a statistically significant 2.8 percentage point decline in LFP for young, low-skilled single males. After conducting a series of robustness checks, I conclude that this result is driven entirely by white males, who responded to welfare-reform policies with a 3.7 percentage point decline in labor supply. Young black males, as well as other groups of potentially affected workers, appear to be uninfluenced by the labor supply response of less-educated single mothers to welfare reform. Impacts on young, single white males are large and economically significant, suggesting that nearly 150,000 males departed the formal labor market in response to directed welfare-reform policies.

What accounts for the decline in labor force participation among married women in urban China, 1991–2011?

Since the advent of Communist movement in the 1940s, women in China have been portrayed as equal partners to men in their labor force participation, operating under slogans such as “Women hold up half the sky”. Political rhetoric in the Mao era suggested that gender parity could be attained through women's participation in paid employment and full time work outside the home became routine for most urban women. Subsequent to the reforms, however, China has experienced a sharp decline in urban women's labor force participation. Utilizing micro-level data spanning from 1991 to 2011, individual women's labor force decisions are analyzed in order to identify the reasons for the decline. Changes in covariates explain only a small portion of the observed decline. However, over the study interval the wage returns to education increased markedly, and the distribution of wages widened considerably. These factors, combined with a high wage elasticity of participation, are consistent with the pattern of declining labor force participation found in the data. As such, promotion of women's education, particularly at the upper secondary level and beyond, could be expected to offset the downward trend.

Impact of the Financial Crisis on Long-Term Growth

This study examines the potential impact of the 2008-2009 financial crisis on economic growth. Expectations of future growth are critical to evaluating of the sustainability of overall budget trends and the financial condition of the Old-Age Survivors and Disability Insurance (OASDI) and Medicare trust funds. The paper includes an assessment of the experience of other industrial economies with similar situations in earlier decades. The Nordic countries achieved a relatively complete recovery within a period of 5-10 years, but the slump in economic growth in Japan has continued for over a quarter century. The analysis of the current experience in the United States focuses on recent changes in the supply of labor and capital and changes in the growth of total factor productivity (TFP). The large decline in the labor force participation rate is largely the result of demographic changes and not the recession. Similarly, the growth of TFP has slowed in recent years, but most studies perceive it as predating the onset of the recession.The paper finds that:-- Even though they may not be directly due to the financial crisis, expectations have been cut back in a wide range of analyses of future growth prospects.-- The recent decline in labor force participation is dominated by demographic changes that will continue in future decades. Only a small portion appears to be related to cyclical factors.-- The growth in TFP has also slowed, but the change predates the financial crisis and is also likely to continue in future years. The policy implications of the findings are:-- The economic assumptions that underlie current projections of government expenditure programs are likely to be overly optimistic, particularly because the changed expectations are not cyclical or temporary in nature.

Editors’ Introduction

Editors’ Introduction

Adjusted EPOP as an Indicator of Labor Market Strength

As a measure of labor market strength, the raw Employment-to-Population ratio ( EPOP ) confounds employment outcomes with labor supply behavior. Movement in the EPOP depends on the relative movements of the employment rate (one minus the unemployment rate) and the labor force participation rate. This paper proposes an adjustment to the calculation of the EPOP , using individual micro data to account for both individual characteristics and the probability of labor force participation, which can be used to assess the strength of the labor market. The adjusted EPOP confirms what we already knew—that the stagnation of the EPOP since the end of the Great Recession is the result of continued declines in the labor force participation rate. Stripping the EPOP of confounding changes in labor supply we uncover a story that is more consistent with movements in the unemployment rate—the adjusted EPOP has regained its prerecession level of nearly 63 percent. Youth have regained even more, and those 25 to 54 regained 71 percent of their loss over the sample period. Of course, there remains the issue of declining labor force participation, which is a legitimate but different concern than whether the labor market is providing enough jobs.

Crime Against Women in India and Declining Labour Force Participation Rate of Females: A Hidden Correlation?

Crime Against Women in India and Declining Labour Force Participation Rate of Females: A Hidden Correlation?

The US healthcare workforce and the labor market effect on healthcare spending and health outcomes

The healthcare sector was one of the few sectors of the US economy that created new positions in spite of the recent economic downturn. Economic contractions are associated with worsening morbidity and mortality, declining private health insurance coverage, and budgetary pressure on public health programs. This study examines the causes of healthcare employment growth and workforce composition in the US and evaluates the labor market's impact on healthcare spending and health outcomes. Data are collected for 50 states and the District of Columbia from 1999-2009. Labor market and healthcare workforce data are obtained from the Bureau of Labor Statistics. Mortality and health status data are collected from the Centers for Disease Control and Prevention's Vital Statistics program and Behavioral Risk Factor Surveillance System. Healthcare spending data are derived from the Centers for Medicare and Medicaid Services. Dynamic panel data regression models, with instrumental variables, are used to examine the effect of the labor market on healthcare spending, morbidity, and mortality. Regression analysis is also performed to model the effects of healthcare spending on the healthcare workforce composition. All statistical tests are based on a two-sided [Formula: see text] significance of [Formula: see text] .05. Analyses are performed with STATA and SAS. The labor force participation rate shows a more robust effect on healthcare spending, morbidity, and mortality than the unemployment rate. Study results also show that declining labor force participation negatively impacts overall health status ([Formula: see text] .01), and mortality for males ([Formula: see text] .05) and females ([Formula: see text] .001), aged 16-64. Further, the Medicaid and Medicare spending share increases as labor force participation declines ([Formula: see text] .001); whereas, the private healthcare spending share decreases ([Formula: see text] .001). Public and private healthcare spending also has a differing effect on healthcare occupational employment per 100,000 people. Private healthcare spending positively impacts primary care physician employment ([Formula: see text] .001); whereas, Medicare spending drives up employment of physician assistants, registered nurses, and personal care attendants ([Formula: see text] .001). Medicaid and Medicare spending has a negative effect on surgeon employment ([Formula: see text] .05); the effect of private healthcare spending is positive but not statistically significant. Labor force participation, as opposed to unemployment, is a better proxy for measuring the effect of the economic environment on healthcare spending and health outcomes. Further, during economic contractions, Medicaid and Medicare's share of overall healthcare spending increases with meaningful effects on the configuration of state healthcare workforces and subsequently, provision of care for populations at-risk for worsening morbidity and mortality.

Demographic versus Cyclical Influences on US Labor Force Participation

This paper applies time series analysis to distinguish between cyclical and demographic causes of the decline of the labor force participation rate. Some public discussions suggest that the decline of US unemployment from its 2009 peak of 10 percent to about 6 percent by mid-2014 grossly exaggerates recovery because most of the decline reflects the exit of discouraged workers from the labor force. This study finds instead that one-half to two-thirds of the decline in labor force participation by about 3 percentage points from late 2007 to early 2014 is attributable to aging of the population. Although about one-third is found attributable to the lagged influence of high, and especially long-term, unemployment, going forward the potential rebound in the participation rate from recovery is projected to be approximately offset by further aging of the population.

The Economic Recovery Five Years after the Financial Crisis

The slow recovery from the recession that ended in 2009 has been the subject of much analysis and comment. However, has the recovery really been slower than expected given the magnitude of the recession, historical patterns, and long-term changes in the U.S. economy and labor force? It is contended here that when these factors are taken into account, the recovery is fairly typical of the post-1960 experience. This paper lays out this case, after providing an overview of the economy as of September 2013. It then turns to the factors underlying the long-term trend of declining labor force participation and concludes by offering implications for policy.

Attempt for Explanation of Declining Labor Force Participation of Women in Turkey through Test of Under-Participation Trap Hypothesis, Applied on Microfinance Survey Data

Labor markets of Turkey are characterized by low female labor force participation when compared with the OECD, neighbour states and EU averages. Besides, the female labor force participation exhibits an unexplained and suprising declining trend in the last decades. The paper attemps to illuminate the phenomenon searching for contingencies in data presented by working women in a microfinance clientele survey in suburban Ankara, especially focusing on status and family related interrelationships that could provide explanation for the low relative number of working women in labor markets of Turkey, testing the Under-participation trap hypothesis

Identifying Factors behind the Decline in the U.S. Labor Force Participation Rate

The analysis in this paper finds that the dramatic decline in labor force participation during the Great Recession is more than explained by deteriorating labor market conditions (cyclical factors).Behavior adjusted over this time period to boost labor force participation so that it was higher in 2012 than would have been predicted by the model. Depending on the strength of the labor market going forward, we project anywhere from a further decline in the labor force participation rate of 0.8pp to an increase of 0.35pp by 2017.

Active social insurance

Abstract The paper argues that a comprehensive activation strategy is called for – in both unemployment and disability insurance – to minimize the conflict between income insurance and work incentives and to prevent the economic crisis from causing a long-lasting decline in labor force participation. A review of recent empirical evidence, particularly from the Scandinavian countries, indicates that “mild” activation requirements effectively counteract moral hazard problems in social insurance. The paper also argues that the distinction between unemployment and disability is blurred, and that both temporary and permanent disability insurance programs should be designed to encourage and support the use of remaining (partial) work capacity.

Dynamics of Muslim Employment during Last Two Decades in India

To supplement the findings of the Sachar committee report current study explores the changing dynamics of trend and composition of employment of Muslims in India during last two decades. Analysis of employment trends shows that there is a decline in labour force participation of Muslims during the recent two decades, both in rural as well as in urban areas. Muslims are concentrated in self-employment activities and a small fraction is involved in regular jobs. Share of Muslim males in both rural and urban areas in self-employment increased significantly while in regular/salaried jobs declined over the period 1993-94 to 2004-05. Further analysis suggests level of education of Muslims is not related with participation in salaried jobs. Study recommends non-quota based affirmative action policies in employment and education for the community with strong political will both at the central as well as state levels.

Unemployment: Structural vs. Cyclical – and Globalization's Adverse Impact

The U.S. economy continues to be characterized by a persistently-high rate of unemployment, with at least another three years before attainment of the pre-recession unemployment rate. Six significant structural trends are identified and their impacts discerned. The pernicious impact of globalization on U.S. employees, as manifested by the post-2000 business practices of America’s multinational corporations (MNCs), has seen multinationals shifting and growing their workforces overseas. Between 1999 and 2008, U.S. non-bank MNCs cut their domestic employment by 1.9 million while increasing their foreign-based employment by 2.4 million. After a decade, it is apparent globalization has yet to come full circle and bestow its gains to American workers. Offshoring by U.S. companies is also having a deleterious effect on the level of domestic employment, particularly in manufacturing and data processing. Advances in technology are serving to replace domestic employees with software or lower-paid foreign-based workers. In 2000-08, domestic spending on capital expenditures by U.S. MNCs grew at an annual rate of 1.1 percent while their foreign-based affiliates invested at an annual rate of 6.2 percent. A need for more highly-educated employees has manifested itself by consistently-favorable wage patterns. The low levels of monthly job creation and a declining labor force participation rates, particularly for prime-age men, since the turn of the century left workers vulnerable to the harshest post-World War II recession. The decreasing participation rate after 2000 may also reflect harmful impacts of globalization, with discouraged laid-off U.S. workers no longer looking for jobs. Over 23 million people – 50 percent of the increase in the U.S. population between 2000 and 2009 – were classified by the Bureau of Labor Statistics as “not in the labor force”. And the detrimental effect of long-term unemployment is a structural impediment to becoming well-positioned to compete for available jobs. The six structural factors – globalization, technological advances, the need for a highly-educated and skilled workforce, declines in the labor force participation rates, particularly for prime-age men, the relatively-low levels of job creation and the effects of long-term unemployment – seem to be currently dominated by cyclical causes. However, if unemployment rates remain elevated for an extended period, structural causes of unemployment will likely predominate.

THE TREND IN RETIREMENT*

A model with leisure production and endogenous retirement is used to explain declining labor force participation rates of elderly males. The model is calibrated to cross‐sectional data on labor force participation rates of U.S. males by age, their drop in consumption, and leisure good expenditure share in 2000. Running the calibrated model for the period 1850–2000, a prediction of the evolution of the cross‐section is obtained. The model accounts for more than 87% of the increase in retirement of men over 65. The increase in retirement is driven by rising wages and falling prices of leisure goods.