Evan Soltas
Dec 29, 2014

Falling Participation, an Update

I recently updated my analysis of the decline in the labor force participation rate using data from the March 2014 Supplement to Current Population Survey.

The top-line result is that, of the 3.1 percentage-point decline in the participation rate between March 2007 and March 2014, 1.9 p.p (three-fifths) is explained demographic change and 1.2 p.p (two-fifths) of it is unexplained by demographic change. Of the explained portion, almost all of that (1.6 p.p.) is aging.

A note on interpreting these results: Econometric analyses of labor-market slack, I think, are helpful in getting a handle on what matters and what doesn't, and roughly how much certain factors matter. But don't hang on every decimal point. Take it into consideration along with the results of other analyses.