The Long-Term Rise and Geographic Concentration of Labor Market Detachment

This paper analyzes the long-term rise of labor market detachment within the United States. We construct a measure of the detachment rate that identifies prime-age men and women who have been out of the labor force for more than a year. Detachment has risen for men in most local labor markets since 1980, and for women since around 2000, with more than a third of the prime-age population detached in some parts of the country. We show there has been a widening in the spatial distribution of detachment and a corresponding increase in its geographic concentration. Empirical results indicate that detachment rose more in places with weak local economies, particularly those that experienced a loss of routine production and administrative support jobs due to globalization and technological change, and that frictions in local labor market adjustment contributed to its uneven rise. Moreover, the rise in detachment has been concentrated among older prime-age individuals and those without a college degree, and, consistent with regional reinvention, occurred less in places with high human capital. These findings point to an important role for place-based economic development policy in distressed regions with persistently high detachment.