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

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  • Julie L. Hotchkiss
  • Fernando Rios-Avila

Abstract

The analysis in this paper finds that the dramatic decline in labor force participation during the Great Recession is more than explained by deteriorating labor market conditions (cyclical factors).Behavior adjusted over this time period to boost labor force participation so that it was higher in 2012 than would have been predicted by the model. Depending on the strength of the labor market going forward, we project anywhere from a further decline in the labor force participation rate of 0.8pp to an increase of 0.35pp by 2017.

Suggested Citation

  • Julie L. Hotchkiss & Fernando Rios-Avila, 2013. "Identifying Factors behind the Decline in the U.S. Labor Force Participation Rate," Business and Economic Research, Macrothink Institute, vol. 3(1), pages 257-275, June.
    • Handle: RePEc:mth:ber888:v:3:y:2013:i:1:p:257-275
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    References listed on IDEAS

    as
    1. Fortin, Nicole & Lemieux, Thomas & Firpo, Sergio, 2011. "Decomposition Methods in Economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 1, pages 1-102, Elsevier.
    2. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    3. Willem Van Zandweghe, 2012. "Interpreting the recent decline in labor force participation," Economic Review, Federal Reserve Bank of Kansas City, vol. 97(Q I), pages 5-34.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Labor force participation; Oaxaca decomposition; Great Recession;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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