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A cohort-based analysis of labor force participation for advanced economies
[Labor force participation: recent developments and future prospects]

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  • Francesco GrigoliBy
  • Zsoka Koczan
  • Petia Topalova

Abstract

Advanced economies are in the midst of a major demographic transition, with the number of elderly rising precipitously. Yet, advanced economies experienced different trajectories in labor force participation rates and workforce attachment of men and women. Using a cohort model for 17 advanced economies during 1985–2016, we document a significant role of common patterns of participation over the life cycle and shifts in these patterns across generations, especially for women. New cohorts of women led to upward shifts in the age participation profile. However, this process plateaued in most countries, with signs of reversal in some. We project sizable declines in participation rates over the next three decades, with aggregate participation forecast to decline by 5.5 percentage points for the median advanced economy. Illustrative simulations show that closing gender gaps, extending working lives, and implementing policies encouraging labor supply can help attenuate, but may not fully offset, demographic pressures.

Suggested Citation

  • Francesco GrigoliBy & Zsoka Koczan & Petia Topalova, 2021. "A cohort-based analysis of labor force participation for advanced economies [Labor force participation: recent developments and future prospects]," Oxford Economic Papers, Oxford University Press, vol. 73(2), pages 623-643.
    • Handle: RePEc:oup:oxecpp:v:73:y:2021:i:2:p:623-643.
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    File URL: http://hdl.handle.net/10.1093/oep/gpaa027
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    References listed on IDEAS

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    1. Stephanie Aaronson & Bruce Fallick & Andrew Figura & Jonathan Pingle & William Wascher, 2006. "The Recent Decline in the Labor Force Participation Rate and Its Implications for Potential Labor Supply," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 37(1), pages 69-154.
    2. Jean-Marc Burniaux & Romain Duval & Florence Jaumotte, 2004. "Coping with Ageing: A Dynamic Approach to Quantify the Impact of Alternative Policy Options on Future Labour Supply in OECD Countries," OECD Economics Department Working Papers 371, OECD Publishing.
    3. Mr. Francesco Grigoli & Zsoka Koczan & Petia Topalova, 2018. "Drivers of Labor Force Participation in Advanced Economies: Macro and Micro Evidence," IMF Working Papers 2018/150, International Monetary Fund.
    4. Stephanie Aaronson & Tomaz Cajner & Bruce Fallick & Felix Galbis-Reig & Christopher Smith & William Wascher, 2014. "Labor Force Participation: Recent Developments and Future Prospects," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 45(2 (Fall)), pages 197-275.
    5. Goldin, Claudia, 2006. "The Quiet Revolution That Transformed Women’s Employment, Education, and Family," Scholarly Articles 2943933, Harvard University Department of Economics.
    6. Balleer, Almut & Gómez-Salvador, Ramón & Turunen, Jarkko, 2009. "Labour force participation in the euro area: a cohort based analysis," Working Paper Series 1049, European Central Bank.
    7. Benedict J. Clements & Kamil Dybczak & Vitor Gaspar & Sanjeev Gupta & Mauricio Soto, 2015. "The Fiscal Consequences of Shrinking Populations," IMF Staff Discussion Notes 15/21, International Monetary Fund.
    8. Bruce Fallick & Jonathan F. Pingle, 2006. "A cohort-based model of labor force participation," Finance and Economics Discussion Series 2007-09, Board of Governors of the Federal Reserve System (U.S.).
    9. Patrick Blagrave & Marika Santoro, 2017. "Labor Force Participation in Chile: Recent Trends, Drivers, and Prospects," IMF Working Papers 2017/054, International Monetary Fund.
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    Cited by:

    1. Hina Amber & Bezawit Beyene Chichaibelu, 2023. "Patterns and Causes of Female Labor Force Participation: An Age–Period–Cohort Analysis for Pakistan," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 42(2), pages 1-31, April.
    2. Paweł A. Strzelecki, 2019. "Health, disability and labor force participation trends in Poland," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 31-53.
    3. Michael Callaghan & Jamie Culling & Finn Robinson, 2018. "Ageing is a drag: Projecting labour force participation in New Zealand," Reserve Bank of New Zealand Analytical Notes series AN2018/10, Reserve Bank of New Zealand.
    4. Mr. Francesco Grigoli & Zsoka Koczan & Petia Topalova, 2018. "Drivers of Labor Force Participation in Advanced Economies: Macro and Micro Evidence," IMF Working Papers 2018/150, International Monetary Fund.
    5. van Dijk, Mathijs A. & van Dalen, Hendrik P. & Hyde, Martin, 2020. "Who bears the brunt? The impact of banking crises on younger and older workers," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    6. Das, Mitali & Hilgenstock, Benjamin, 2022. "The exposure to routinization: Labor market implications for developed and developing economies," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 99-113.

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    More about this item

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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