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Trends in the aggregate labor force

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  • Kenneth J. Matheny

Abstract

Trend growth in the labor force is a key determinant of trends in employment and gross domestic product (GDP). Forecasts by Macroeconomic Advisers (MA) have long anticipated a marked slowing in trend growth of the labor force that would contribute to a slowing in potential GDP growth. This is reflected in MA's forecast that the aggregate rate of labor force participation will trend down, especially after 2010, largely in response to the aging of the baby boom generation, whose members are beginning to approach typical retirement ages. Expectations for a downward trajectory for the participation rate and a slowing in trend labor force growth are not unique. However, this article reports on MA research suggesting that the opposite is possible: that the slowdown in trend labor force growth could be relatively modest and that the trend in the aggregate rate of labor force participation will decline little, if at all, over the next decade.

Suggested Citation

  • Kenneth J. Matheny, 2009. "Trends in the aggregate labor force," Review, Federal Reserve Bank of St. Louis, vol. 91(Jul), pages 297-310.
    • Handle: RePEc:fip:fedlrv:y:2009:i:jul:p:297-310:n:v.91no.4
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    References listed on IDEAS

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    1. Gopi Shah Goda & John B. Shoven & Sita Nataraj Slavov, 2009. "Removing the Disincentives in Social Security for Long Careers," NBER Chapters, in: Social Security Policy in a Changing Environment, pages 21-38, National Bureau of Economic Research, Inc.
    2. Alicia H. Munnell & Steven A. Sass, 2007. "The Labor Supply of Older Americans," Working Papers, Center for Retirement Research at Boston College wp2007-12, Center for Retirement Research, revised Jun 2007.
    3. 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.
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    Cited by:

    1. Julie L. Hotchkiss, 2014. "Adjusted Employment-to-Population Ratio as an Indicator of Labor Market Strength," FRB Atlanta Working Paper 2014-8, Federal Reserve Bank of Atlanta.

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