IDEAS home Printed from https://ideas.repec.org/p/zbw/glodps/265.html
   My bibliography  Save this paper

Drivers of Labor Force Participation in Advanced Economies: Macro and Micro Evidence

Author

Listed:
  • Grigoli, Francesco
  • Koczan, Zsoka
  • Topalova, Petia

Abstract

Despite significant headwinds from population aging in most advanced economies (AEs), labor force participation rates show remarkably divergent trajectories both across countries and across different groups of workers. Participation increased sharply among prime-age women and, more recently, older workers, but fell among the young and prime-age men. This paper investigates the determinants of these trends using aggregate and individual-level data. We find that the bulk of the dramatic increase in the labor force attachment of prime-age women and older workers in the past three decades can be explained by changes in labor market policies and institutions, structural transformation, and gains in educational attainment. Technological advances such as automation, on the other hand, weighed on the labor supply of prime-age and older workers. In light of the dramatic demographic shifts expected in the coming decades in many AEs, our findings underscore the need to invest in education and training, reform the tax system, reduce early retirement incentives, improve the job-matching process, and help individuals combine family and work life in order to alleviate the pressures from aging on labor supply.

Suggested Citation

  • Grigoli, Francesco & Koczan, Zsoka & Topalova, Petia, 2018. "Drivers of Labor Force Participation in Advanced Economies: Macro and Micro Evidence," GLO Discussion Paper Series 265, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:265
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/183212/1/GLO-DP-0265.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Claudia Olivetti & Barbara Petrongolo, 2017. "The Economic Consequences of Family Policies: Lessons from a Century of Legislation in High-Income Countries," Journal of Economic Perspectives, American Economic Association, vol. 31(1), pages 205-230, Winter.
    2. Mette Foged & Giovanni Peri, 2016. "Immigrants' Effect on Native Workers: New Analysis on Longitudinal Data," American Economic Journal: Applied Economics, American Economic Association, vol. 8(2), pages 1-34, April.
    3. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier.
    4. Kahn, Lisa B., 2010. "The long-term labor market consequences of graduating from college in a bad economy," Labour Economics, Elsevier, vol. 17(2), pages 303-316, April.
    5. Daron Acemoglu & Pascual Restrepo, 2017. "Robots and Jobs: Evidence from US Labor Markets," Boston University - Department of Economics - Working Papers Series dp-297, Boston University - Department of Economics.
    6. Mai Chi Dao & Mitali Das & Zsoka Koczan & Weicheng Lian, 2017. "Why Is Labor Receiving a Smaller Share of Global Income? Theory and Empirical Evidence," IMF Working Papers 17/169, International Monetary Fund.
    7. Francesco Grigoli & Zsoka Koczan & Petia Topalova, 2018. "A Cohort-Based Analysis of Labor Force Participation for Advanced Economies," IMF Working Papers 18/120, International Monetary Fund.
    8. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
    9. Benjamin Hilgenstock & Zsoka Koczan, 2018. "Permanently Displaced? Increasingly Disconnected? Labor Force Participation in U.S. States and Metropolitan Areas," IMF Working Papers 18/118, International Monetary Fund.
    10. Maarten Goos & Alan Manning & Anna Salomons, 2014. "Explaining Job Polarization: Routine-Biased Technological Change and Offshoring," American Economic Review, American Economic Association, vol. 104(8), pages 2509-2526, August.
    11. repec:wsi:wschap:9789814719902_0005 is not listed on IDEAS
    12. Francesco D'Amuri & Giovanni Peri, 2016. "Immigration, Jobs, And Employment Protection: Evidence From Europe Before And During The Great Recession," World Scientific Book Chapters,in: The Economics of International Migration, chapter 5, pages 153-185 World Scientific Publishing Co. Pte. Ltd..
    13. Daron Acemoglu & Pascual Restrepo, 2017. "Robots and Jobs: Evidence from US Labor Markets," NBER Working Papers 23285, National Bureau of Economic Research, Inc.
    14. Benedict J. Clements & Kamil Dybczak & Vitor Gaspar & Sanjeev Gupta & Mauricio Soto, 2015. "The Fiscal Consequences of Shrinking Populations," IMF Staff Discussion Notes 15/21, International Monetary Fund.
    15. Mai Dao & Davide Furceri & Tae-Jeong Kim & Meeyeon Kim & Jisoo Hwang, 2014. "Strategies for Reforming Korea’s Labor Market to Foster Growth," IMF Working Papers 14/137, International Monetary Fund.
    16. Harry J. Holzer & Paul Offner & Elaine Sorensen, 2005. "Declining employment among young black less-educated men: The role of incarceration and child support," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 24(2), pages 329-350.
    17. David M. Blau & Ryan M. Goodstein, 2010. "Can Social Security Explain Trends in Labor Force Participation of Older Men in the United States?," Journal of Human Resources, University of Wisconsin Press, vol. 45(2).
    18. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Francesco Grigoli & Zsoka Koczan & Petia Topalova, 2018. "A Cohort-Based Analysis of Labor Force Participation for Advanced Economies," IMF Working Papers 18/120, International Monetary Fund.

    More about this item

    Keywords

    labor force participation; policies; technology; routinization;

    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
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:glodps:265. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - Leibniz Information Centre for Economics). General contact details of provider: http://edirc.repec.org/data/glaboea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.