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

Hotchkiss, Julie L.; Rios‐Avila, Fernando

doi:10.5296/ber.v3i1.3370

Cited by 31 publications

(13 citation statements)

References 17 publications

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“…10 See also Fujita (2014) and Hotchkiss and Rios-Avila (2013). The low explanatory power of the usual economic variables in determining the decline in labor force participation is also noted by Fujita who writes: "Almost all of the decline (80 percent) in the participation rate since the first quarter of 2012 is accounted for by the increase in nonparticipation due to retirement…The likelihood of those who left the labor force due to retirement or disability rejoining the labor force is small and has been largely insensitive to business cycle conditions in the past, suggesting that the decision to leave the labor force for those two reasons is more or less permanent" (Fujita, 2014, p.…”

Section: Trends In the Labor Supply Of Undocumented Immigrantsmentioning

confidence: 99%

The labor supply of undocumented immigrants

Borjas

2017

Labour Economics

134

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The Department of Homeland Security estimates that 11.4 million undocumented persons reside in the United States. Congress and President Obama are considering a number of proposals to regularize the status of the undocumented population and provide a "path to citizenship." Any future change in the immigration status of this group is bound to have significant effects on the labor market, on the number of persons that qualify for various government-provided benefits, on the timing of retirement, on the size of the population receiving Social Security benefits, and on the funding of almost all of these government programs. This paper provides a comprehensive empirical study of the labor supply behavior of undocumented immigrants in the United States. Using newly developed methods that attempt to identify undocumented status for foreign-born persons sampled in the Current Population Surveys, the empirical analysis documents a number of findings, including the fact that the work propensity of undocumented men is much larger than that of other groups in the population; that this gap has grown over the past two decades; and that the labor supply elasticity of undocumented men is very close to zero, suggesting that their labor supply is almost perfectly inelastic.

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Section: Trends In the Labor Supply Of Undocumented Immigrantsmentioning

confidence: 99%

The labor supply of undocumented immigrants

Borjas

2017

Labour Economics

134

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“…Another paper in this vein is Hotchkiss and Rios-Avila (2013), who argue "that the dramatic decline in labor force participation during the Great Recession is more than explained by deteriorating labor market conditions (cyclical factors)" (p. 257). While acknowledging the downward pressure on participation from the aging of the population, they claim that the 2 Using the BLS projection from November 2007 as a baseline seems somewhat dubious to us, given that their projections of the labor force participation rate trend through 2014 were well above those from our 2006 paper.…”

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confidence: 99%

Labor Force Participation: Recent Developments and Future Prospects

Aaronson¹,

Cajner²,

Fallick

et al. 2014

Working Paper (Federal Reserve Bank of Cleveland)

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Since 2007, the labor force participation rate has fallen from about 66 percent to about 63 percent. The sources of this decline have been widely debated among academics and policymakers, with some arguing that the participation rate is depressed due to weak labor demand while others argue that the decline was inevitable due to structural forces such as the aging of the population. In this paper, we use a variety of approaches to assess reasons for the decline in participation. Although these approaches yield somewhat different estimates of the extent to which the recent decline in participation refl ects cyclical weakness rather than structural factors, our overall assessment is that much-but not all-of the decline in the labor force participation rate since 2007 is structural in nature. As a result, while we see some of the current low level of the participation rate as indicative of labor market slack, we do not expect the participation rate to show a substantial increase from current levels as labor market conditions continue to improve.JEL Codes: E24, E32, E66, J21, J26.Keywords: Labor force participation, retirement behavior, disability insurance, implications of an aging population, youth employment, labor market slack, labor market fl uctuations and the business cycle.

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“…Sherk () analyzes microdata from the Current Population Survey (CPS) and finds that demographic factors only accounted for one‐fifth of the postrecession decline in LFPR. Finally, Hotchkiss and Rios‐Avila () estimate a behavioral model of labor supply using CPS microdata and conclude that the decline in LFPR since the Great Recession was more than fully explained by the deterioration in labor market conditions…”

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confidence: 99%

Labor Force Participation and Monetary Policy in the Wake of the Great Recession

Erceg¹,

Levin²

2014

J of Money Credit Banking

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This paper provides compelling evidence that cyclical factors account for the bulk of the post‐2007 decline in the U.S. labor force participation rate (LFPR). We then formulate a stylized New Keynesian model in which the LFPR is practically acyclical during “normal times” but drops markedly following a large and persistent aggregate demand shock. These considerations have potentially crucial implications for the design of monetary policy, especially when interest rate adjustments are constrained by the zero lower bound; specifically, monetary policy can induce a more rapid recovery of the LFPR by allowing the unemployment rate to fall below its natural rate.

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

Cited by 31 publications

References 17 publications

The labor supply of undocumented immigrants

The labor supply of undocumented immigrants

Labor Force Participation: Recent Developments and Future Prospects

Labor Force Participation and Monetary Policy in the Wake of the Great Recession

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