About


The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.

Authors for macroblog are Dave Altig, John Robertson, and other Atlanta Fed economists and researchers.


« Another Look at the Wage Growth Tracker's Cyclicality | Main | Behind the Increase in Prime-Age Labor Force Participation »

July 12, 2017


An Update on Labor Force Participation

With the unemployment rate essentially back to prerecession levels, economists have been paying increased attention to the labor force participation rate (LFPR). Many economists, including those at the Congressional Budget Office , believe untapped resources remain on the sidelines of the labor market.

What exactly does "on the sidelines" entail? Discouraged workers are only a small part of the story. To help unravel the rest of the mystery behind the elevated share of people not participating, we at the Atlanta Fed use the microdata from the Current Population Survey to code the activities of persons not in the labor force. We then calculate how changes in each activity contribute to the total change in the LFPR.

The chart below depicts the drivers of the change in the LFPR from the first quarter of 2016 to the first quarter of 2017. (The interactive tool on our website allows you to make comparisons across gender, age group, and time.) The LFPR rose just slightly (about 0.06 percentage points). However, that small change was the net result of much larger countervailing forces. Other things equal, demographic changes during the year would have lowered the LFPR by around 0.14 percentage points. The aging of the population put significant downward pressure on the LFPR (pushing it down 0.24 percentage points), but a more educated workforce helped push up the LFPR (0.10 percentage points). If the age and education mix of the population had not changed, the LFP rate would have risen by about 0.19 percentage points (see the chart).

The following chart further breaks down the behavioral and cyclical components at work. After controlling for shifts in the demographic mix of the population during the year, the largest contributing factor was a decline in the rate of nonparticipation because of family responsibilities.

This is a particularly important explanation for prime-age women (defined as women between 25 and 54 years of age). A smaller share of prime-age women who say they are busy with home and/or family responsibilities accounts for about half of the 0.62 percentage point increase in LFPR that occurred between the first quarter of 2016 and the first quarter of 2017 (see the chart).

To examine factors affecting prime-age men's participation or to learn more about the cyclical and structural factors behind each reason, visit our website.


July 12, 2017 in Economic conditions , Employment , Labor Markets , Wage Growth | Permalink

Comments

Post a comment

Comments are moderated and will not appear until the moderator has approved them.

If you have a TypeKey or TypePad account, please Sign in

Google Search



Recent Posts


July 2017


Sun Mon Tue Wed Thu Fri Sat
            1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31          

Archives


Categories


Powered by TypePad