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The UK labour force participation rate: business cycle and trend influences

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  • Mark Schweitzer
  • David Tinsley

Abstract

In this paper the extent to which recent patterns in UK labour force participation have been influenced by trend and business cycle factors is investigated. A modelling strategy is proposed that pools the available micro and aggregate-level data, to produce a mutually consistent model of the trend and cyclical components of participation. A significant procyclical pattern is established, but some distinct trend influences on the participation rate are also identified. The approach allows for the construction of forecasts, which would be a useful input into the sort of macroeconometric models used by policymakers. The model outperforms some conventional macroeconometric forecasts in out-of-sample forecast tests.

Suggested Citation

  • Mark Schweitzer & David Tinsley, 2004. "The UK labour force participation rate: business cycle and trend influences," Bank of England working papers 228, Bank of England.
    • Handle: RePEc:boe:boeewp:228
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    File URL: http://www.bankofengland.co.uk/research/Documents/workingpapers/2004/WP228.pdf
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    6. Harvey, A C & Jaeger, A, 1993. "Detrending, Stylized Facts and the Business Cycle," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 8(3), pages 231-247, July-Sept.
    7. Blundell, Richard & Meghir, Costas & Symons, Elizabeth & Walker, Ian, 1988. "Labour supply specification and the evaluation of tax reforms," Journal of Public Economics, Elsevier, vol. 36(1), pages 23-52, June.
    8. Joanne Cutler & Kenny Turnbull, 2001. "A Disaggregated Approach to Modelling UK Labour Force Participation," Discussion Papers 04, Monetary Policy Committee Unit, Bank of England.
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    Cited by:

    1. Diego Danny ONTANEDA JIMÉNEZ & Wilson Alejandro GUZMÁN ESPINOZA & Luis Rodrigo MENDIETA MUÑOZ & Monica RĂILEANU SZELES, 2022. "Cohort Analysis of Labor Participation and Sectoral Composition of Employment in Ecuador," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 67-87, October.
    2. Puigvert Jonathan & Juárez-Torres Miriam, 2019. "Labour Force Participation and the Business Cycle in Mexico," Working Papers 2019-04, Banco de México.
    3. Katarzyna Budnik & Michal Greszta & Michal Hulej & Marcin Kolasa & Karol Murawski & Michal Rot & Bartosz Rybaczyk & Magdalena Tarnicka, 2009. "The new macroeconometric model of the Polish economy," NBP Working Papers 62, Narodowy Bank Polski.
    4. Wei Jiang, 2014. "Tax Reforms in Search-and-Matching Models with Heterogeneous Agents," Studies in Economics 1414, School of Economics, University of Kent.

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