Declining Labor Force Attachment and Downward Trends in Unemployment and Participation

By Federal Reserve Board

The US labor market witnessed two apparently unrelated secular movements in the last 30 years: a decline in unemployment between the early 1980s and the early 2000s, and a decline in participation since the early 2000s. Using CPS micro data and a stock flow accounting framework, we show that a substantial, and hitherto unnoticed, factor behind both trends is a decline in the share of nonparticipants who are at the margin of participation. A lower share of marginal nonparticipants implies a lower unemployment rate, because marginal nonparticipants enter the labor force mostly through unemployment, while other nonparticipants enter the labor force mostly through employment.

• Format: Paperback
• Language: English
• ISBN: 150322368X
• ISBN13: 9781503223684
• Release Date: November 2014
• Publisher: Createspace Independent Publishing Platform
• Length: 26 Pages
• Weight: 0.19 lbs.
• Dimensions: 0.1" x 8.5" x 11.0"