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Employment growth and labor force participation: how many jobs are enough?

  • Julie L. Hotchkiss

Public concerns about the “jobless” recovery following the 2001 recession have centered on whether enough jobs will be created for those who want to work. A more pressing question, however, may be how many jobs are needed to sustain desired growth in overall economic output. ; This article provides an analysis of just how many jobs are needed to keep unemployment in check and considers whether the current rate of job creation is enough to fuel optimal gross domestic product growth. The author examines the decline in the labor force participation rate that has occurred since the late 1990s. Part of the decline in the rate is likely a response to fewer job opportunities as a result of the recession. She also notes, however, that the decline suggests other, noncyclical factors may be at play and are likely to be compounded by baby boomers entering retirement age. The author discusses the pros and cons of some options for increasing the flow of workers into the labor force, including raising the retirement age, increasing immigration, and offshore outsourcing. ; While the current rate of job creation should be able to sustain the expected labor force growth for the near term, she concludes, it is not clear that this rate can sustain a desirable rate of economic growth in the long run. Any of the options policymakers have for affecting this trend of slower labor force growth will take time to implement and adjust to, suggesting that serious discussions of these options’ respective merits should begin now.

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Article provided by Federal Reserve Bank of Atlanta in its journal Economic Review.

Volume (Year): (2005)
Issue (Month): Q 1 ()
Pages: 1-13

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Handle: RePEc:fip:fedaer:y:2005:i:q1:p:1-13:n:v.90no.1
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  1. repec:fda:fdaddt:2003-03 is not listed on IDEAS
  2. Jonathan Gruber & David Wise, 1997. "Social Security Programs and Retirement Around the World: Introduction and Summary of Papers by..," NBER Working Papers 6134, National Bureau of Economic Research, Inc.
  3. Conde-Ruiz, J.I. & Galasso, V., 2000. "Early Retirement," Economics Working Papers eco2000/24, European University Institute.
  4. H. Naci Mocan & Stephen C. Billups & Jody Overland, 2000. "A Dynamic Model of Differential Human Capital and Criminal Activity," NBER Working Papers 7584, National Bureau of Economic Research, Inc.
  5. Courtney Coile & Jonathan Gruber, 2000. "Social Security and Retirement," NBER Working Papers 7830, National Bureau of Economic Research, Inc.
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