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Demographic versus Cyclical Influences on US Labor Force Participation
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Demographic versus Cyclical Influences on US Labor Force Participation

William R. Cline and Jared Nolan
Peterson Institute for International Economics, 2014
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Editorial Rating

7

Qualities

  • Analytical
  • Eye Opening
  • Overview

Recommendation

Demography may or may not be destiny, but aging baby boomers are having a significant impact on the labor market in the United States. Beginning in 2008, the Great Recession raised American unemployment; that same year, the first boomers reached retirement age. This concise paper on workforce demographics by economist William R. Cline and researcher Jared Nolan of the Peterson Institute for International Economics untangles the temporary phenomenon of discouraged workers dropping out of the labor pool from the permanent loss of retiring employees and lends a new perspective to the falling US unemployment rate. getAbstract recommends this report for the careful way it reveals how the Great Recession distracted everyone from important and long-lasting demographic trends.

Summary

Many observers assume that recent lower US unemployment numbers are due to dispirited jobseekers abandoning their search for work. As the labor participation rate has fallen from about 67% in 1999 to 63% in 2013, it seems reasonable that, with an improving economy, participation rates will rise as discouraged workers re-enter a better job market. However, the extent to which cyclical factors – such as worker disillusionment due to long-term unemployment – or structural factors – such as a changing labor pool – drive participation rates merits...

About the Authors

William R. Cline is a senior fellow at the Peterson Institute for International Economics, where Jared Nolan worked as a research analyst before joining Cornerstone Research.

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