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Labour force participation in the euro area: a cohort based analysis

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  • Balleer, Almut
  • Gómez-Salvador, Ramón
  • Turunen, Jarkko

Abstract

We use a cohort based model to analyse determinants of labour force participation for disaggregated groups of workers in the euro area and the five largest euro area countries. The model captures age and cohort effects as indicators of (unobserved) determinants of participation behaviour. We use these effects and observed determinants to construct trends and projections of labour supply. Our results suggest that age and cohort effects can account for a substantial part of the recent increase in participation. Cohort effects are particularly relevant for women with those born in the late 1960s and early 1970s more likely to participate over the life-cycle. There is substantial variation in the estimated age and cohort effects across countries. Looking forward, positive cohort effects for women are not large enough to compensate for the downward impact of population ageing on participation rates in the euro area. JEL Classification: J11, J21

Suggested Citation

  • Balleer, Almut & Gómez-Salvador, Ramón & Turunen, Jarkko, 2009. "Labour force participation in the euro area: a cohort based analysis," Working Paper Series 1049, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:20091049
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    References listed on IDEAS

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    1. Klaus Masuch & Ramon Gómez-Salvador & Nadine Leiner-Killinger & Rolf Strauch & Jarkko Turunen & Melanie Ward-Warmedinger & Jan De Mulder & Harald Stahl & Yvonne McCarthy & Daphne Nicolitsas & Aitor La, 2008. "Labour supply and employment in the euro area countries - developments and challenges," Occasional Paper Series 87, European Central Bank.
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    11. 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. Vendrik Maarten & Cörvers Frank, 2009. "Male and female labour force participation: the role of dynamic adjustments to changes in labour demand, government policies and autonomous trends," Research Memorandum 036, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    2. Marco Pautasso, 2015. "The Italian University Habilitation and the Challenge of Increasing the Representation of Women in Academia," Challenges, MDPI, Open Access Journal, vol. 6(1), pages 1-16, March.
    3. Kamil Galuscak & Gabor Katay, 2014. "Labour Force Participation and Tax-Benefit Systems: A Cross-Country Comparative Perspective," Working Papers 2014/10, Czech National Bank, Research Department.
    4. Stephanie Aaronson & Tomaz Cajner & Bruce Fallick & Felix Galbis-Reig & Christopher Smith & William Wascher, 2014. "Labor Force Participation: Recent Developments and Future Prospects," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 45(2 (Fall)), pages 197-275.
    5. Sebastian Klüsener & Karel Neels & Michaela Kreyenfeld, 2013. "Social norms, family policies, and fertility trends: insights from a comparative study on the German-speaking region in Belgium," MPIDR Working Papers WP-2013-003, Max Planck Institute for Demographic Research, Rostock, Germany.
    6. Francesco Nucci & Marianna Riggi, 2015. "Labour force participation, wage rigidities, and inflation," DSS Empirical Economics and Econometrics Working Papers Series 2015/1, Centre for Empirical Economics and Econometrics, Department of Statistics, "Sapienza" University of Rome.
    7. Paweł Strzelecki & Joanna Tyrowicz, 2015. "Crowding (out) the retirees? RDD application to raising effective retirement age in Poland," Working Papers 2015-10, Faculty of Economic Sciences, University of Warsaw.
    8. repec:eso:journl:v:48:y:2017:i:1:p:27-60 is not listed on IDEAS
    9. Benito, Andrew & Bunn, Philip, 2011. "Understanding labour force participation in the United Kingdom," Bank of England Quarterly Bulletin, Bank of England, vol. 51(1), pages 36-42.
    10. Cipollone, Angela & Patacchini, Eleonora & Vallanti, Giovanna, 2012. "Women’s Labour Market Performance in Europe: Trends and Shaping Factors," CEPS Papers 7329, Centre for European Policy Studies.
    11. Mahapatro, Sandhya Rani, 2013. "Declining Trends in Female Labour Force Participation in India: Evidence from NSSO," MPRA Paper 44373, University Library of Munich, Germany.
    12. Elke Loichinger, 2015. "Labor force projections up to 2053 for 26 EU countries, by age, sex, and highest level of educational attainment," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 32(15), pages 443-486, February.
    13. Elke Loichinger & Alexia Fürnkranz-Prskawetz, 2017. "Changes in economic activity: The role of age and education," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 36(40), pages 1185-1208, April.
    14. Claudia Münch & Sweder van Wijnbergen, 2009. "Education and Labor Market Activity of Women: An Age-Group Specific Empirical Analysis," Tinbergen Institute Discussion Papers 09-099/2, Tinbergen Institute.
    15. Angela Cipollone & Eleonora Patacchini & Giovanna Vallanti, 2013. "Women Labor Market Performance In Europe:Novel Evidence On Trends And Shaping Factors," Working Papers LuissLab 13107, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    16. Angela Cipollone & Eleonora Patacchini & Giovanna Vallanti, 2014. "Female labour market participation in Europe: novel evidence on trends and shaping factors," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-40, December.
    17. Mirko Savic, Ivan Zubovic, Danica Drakulic, 2014. "Dynamics Of Female Participation In Higher Education And Employment – The Absorption Index," Ekonomika, Journal for Economic Theory and Practice and Social Issues 2014-01, „Ekonomika“ Society of Economists, Niš (Serbia).
    18. Byrne, Stephen & O'Brien, Martin, 2016. "Understanding Irish Labour Force Participation," Economic Letters 01/EL/16, Central Bank of Ireland.
    19. Cipollone, Angela & Patacchini, Eleonora & Vallanti, Giovanna, 2013. "Women Labor Market Participation in Europe: Novel Evidence on Trends and Shaping Factors," IZA Discussion Papers 7710, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    cohort analysis; labour force participation; Labour Market Institutions;

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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