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The Driving Force of Labor Force Participation in Developed Countries

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  • Ivan O. KITOV

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, 2008. "The Driving Force of Labor Force Participation in Developed Countries," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 3(3(5)_Fall), pages 203-222.
  • Handle: RePEc:ush:jaessh:v:3:y:2008:i:3(5)_fall2008:p:203-222
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    References listed on IDEAS

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    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. 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.
    5. Julie L. Hotchkiss, 2005. "Employment growth and labor force participation: how many jobs are enough?," Economic Review, Federal Reserve Bank of Atlanta, issue Q 1, pages 1-13.
    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. Robert Haveman & Philip de Jong & Barbara Wolfe, 1991. "Disability Transfers and the Work Decision of Older Men," The Quarterly Journal of Economics, Oxford University Press, vol. 106(3), pages 939-949.
    8. 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.
    9. Ivan Kitov, 2005. "Evolution of the personal income distribution in the USA: High incomes," Economics Bulletin, AccessEcon, vol. 28(12), pages 1.
    10. Ivan, Kitov, 2006. "Exact prediction of inflation in the USA," MPRA Paper 2735, University Library of Munich, Germany.
    11. 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.
    12. 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.
    13. John Haltiwanger & Marilyn E. Manser & Robert Topel, 1998. "Labor Statistics Measurement Issues," NBER Books, National Bureau of Economic Research, Inc, number halt98-1.
    14. 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.
    15. Bruce C. 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.
    16. 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.
    17. Daniel Aaronson & Kyung-Hong Park & Daniel G. Sullivan, 2006. "The decline in teen labor force participation," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 2-18.
    18. 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.
    19. repec:ebl:ecbull:v:28:y:2005:i:12:p:a0 is not listed on IDEAS
    20. 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.
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    Citations

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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. 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).
    3. Kitov, Ivan & Kitov, Oleg & Dolinskaya, Svetlana, 2008. "Comprehensive macro-model for the U.S. economy," MPRA Paper 9808, University Library of Munich, Germany.

    More about this item

    Keywords

    labor force participation; real GDP per capita; prediction;

    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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