Having a new baby in my house is putting a serious crimp on my blog reading. But anyway, I came across this from Macroblog on labor force participation. I thought it was first rate analysis, as per usual from that first rate blog. I won't rehash it here, you should go to his site and give him more hits.
A couple random thoughts on the subject:
- We have to accept that the labor force participation rate will be declining over the next couple decades. The aging population assures this, I think. We should not misinterpret this as despondent workers or general economic weakness.
- The declining labor participation of teenagers is logical to me. If more are in school, fewer are working. I don't know how the DOL counts part-time employees.
- Some of the long-term trends that resulted in greater labor force participation in the last 2-3 decades or so are probably ending. For example, David's graphs show greater participation among the 55+ group, which likely reflects improved health of older workers. But that trend can't continue indefinitely. We aren't headed for a future where 80-year olds are a major part of the labor force. At least not soon.
- Also in the 1960's and 1970's, the participation of women greatly increased, but this appears to have leveled off.
But what are the consequences for interest rates? Beats me.
3 comments:
I'm not sure I have a good response to this, but a first thought is, doesn't Europe have a serious problem with the employment of their younger population? Perhaps it would be good to refer to their situation?
I wonder if the decline of teens is about the reduced buying power of wages. I'm pretty sure minimum wage has half the buying power today as it did when I was a teen.
I really think the teen thing is about more people going to school. I have a hard time believing that a decline in teenage labor participation is going to create a long-term negative economic trend. Its a group that was overwhelmingly part-time employed to begin with.
Deborah:
I don't buy the wage thing either. The marginal value of a dollar to a teenager is high, unless his/her parents are just giving him/her money, in which case its low. That laborer is a price taker and happy to take the price.
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