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The driving force of labor force participation in developed countries

Author

Listed:
  • Ivan O. Kitov

    (Institute for the Geospheres' Dynamics, Russian Academy of Sciences)

  • Oleg I. Kitov

    (Warwick University)

Abstract

The evolution of labor force participation rate is modeled using a lagged linear function of real economic growth, as expressed by GDP per capita. For the U.S., our model predicts at a two-year horizon with RMSFE of 0.28% for the period between 1965 and 2007. Larger part of the deviation between predicted and measured LFP is explained by artificial dislocations in measured time series induced by major revisions to the CPS methodology in 1979 and 1989. Similar models have been developed for Japan, the UK, France, Italy, Canada, and Sweden.

Suggested Citation

  • Ivan O. Kitov & Oleg I. Kitov, 2008. "The driving force of labor force participation in developed countries," Working Papers 90, ECINEQ, Society for the Study of Economic Inequality.
    • Handle: RePEc:inq:inqwps:ecineq2008-90
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    File URL: http://www.ecineq.org/milano/WP/ECINEQ2008-90.pdf
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    References listed on IDEAS

    as
    1. Kitov, Ivan, 2007. "Modeling the evolution of Gini coefficient for personal incomes in the USA between 1947 and 2005," MPRA Paper 2798, University Library of Munich, Germany.
    2. Daniel Aaronson & Kyung-Hong Park & Daniel G. Sullivan, 2007. "Explaining the decline in teen labor force participation," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Jan.
    3. Kitov, Ivan, 2006. "Real GDP per capita in developed countries," MPRA Paper 2738, University Library of Munich, Germany.
    4. Chinhui Juhn & Simon Potter, 2006. "Changes in Labor Force Participation in the United States," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 27-46, Summer.
    5. Anne E. Polivka, 1996. "Data Watch: The Redesigned Current Population Survey," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 169-180, Summer.
    6. Ivan O. KITOV & Oleg I. KITOV & Svetlana A. DOLINSKAYA, 2009. "Modelling Real Gdp Per Capita In The Usa:Cointegration Tests," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 4(1(7)_ Spr).
    7. John Haltiwanger & Marilyn E. Manser & Robert Topel, 1998. "Labor Statistics Measurement Issues," NBER Books, National Bureau of Economic Research, Inc, number halt98-1, March.
    8. Ivan, Kitov, 2006. "Exact prediction of inflation in the USA," MPRA Paper 2735, University Library of Munich, Germany.
    9. 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.
    10. Bruce Fallick & Jonathan F. Pingle, 2007. "The effect of population aging on aggregate labor supply in the United States," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 52.
    11. Julie L. Hotchkiss, 2005. "Employment growth and labor force participation: how many jobs are enough?," Economic Review, Federal Reserve Bank of Atlanta, vol. 90(Q 1), pages 1-13.
    12. Kevin M. Murphy & Robert H. Topel, 1987. "The Evolution of Unemployment in the United States: 1968–1985," NBER Chapters, in: NBER Macroeconomics Annual 1987, Volume 2, pages 11-68, National Bureau of Economic Research, Inc.
    13. Robert Haveman & Philip de Jong & Barbara Wolfe, 1991. "Disability Transfers and the Work Decision of Older Men," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(3), pages 939-949.
    14. Daniel Aaronson & Kyung-Hong Park & Daniel G. Sullivan, 2006. "The decline in teen labor force participation," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 30(Q I), pages 2-18.
    15. Anne E. Polivka & Stephen M. Miller, 1998. "The CPS after the Redesign: Refocusing the Economic Lens," NBER Chapters, in: Labor Statistics Measurement Issues, pages 249-289, National Bureau of Economic Research, Inc.
    16. Veracierto, Marcelo, 2008. "On the cyclical behavior of employment, unemployment and labor force participation," Journal of Monetary Economics, Elsevier, vol. 55(6), pages 1143-1157, September.
    17. Ivan Kitov, 2005. "Evolution of the personal income distribution in the USA: High incomes," Economics Bulletin, AccessEcon, vol. 28(12), pages 1.
    18. repec:ebl:ecbull:v:28:y:2005:i:12:p:a0 is not listed on IDEAS
    19. Julie L. Hotchkiss, 2005. "What’s up with the decline in female labor force participation?," FRB Atlanta Working Paper 2005-18, Federal Reserve Bank of Atlanta.
    20. Ivan O. Kitov, 2006. "Modelling the age-dependent personal income distribution in the USA," Working Papers 17, ECINEQ, Society for the Study of Economic Inequality.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. We accurately predicted the fall in the labor force participation rate since 2000 at a two-year horizon
      by Ivan Kitov in Economics as Classical Mechanics on 2022-11-13 15:24:00

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    Cited by:

    1. Oleg KITOV & Ivan KITOV, 2012. "A Win-Win Monetary Policy In Canada," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 6(6(18)/ Su), pages 160-176.
    2. Kitov, Ivan & Kitov, Oleg, 2009. "Modelling and predicting labor force productivity," MPRA Paper 15152, University Library of Munich, Germany.
    3. Ivan O. KITOV & Oleg I. KITOV & Svetlana A. DOLINSKAYA, 2008. "Comprehensive Macro Ï¿½ Model For The Us Economy," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 3(4(6)_Wint).
    4. Gloria O. Dzeha & Joshua Abor & Festus Turkson & Elikplimi Agbloyor, 2018. "Technical Efficiency and Technical Change in Africa: The Role of Money from the Diasporas," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(7), pages 177-177, July.
    5. Kitov, Ivan & Kitov, Oleg & Dolinskaya, Svetlana, 2008. "Comprehensive macro-model for the U.S. economy," MPRA Paper 9808, University Library of Munich, Germany.

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    More about this item

    Keywords

    labor force participation; real GDP per capita; prediction;
    All these keywords.

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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