Declining labor force attachment and downward trends in unemployment and participation

Barnichon, Régis; Figura, Andrew

Declining labor force attachment and downward trends in unemployment and participation

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Citació

Barnichon, R, Figura, A. Declining labor force attachment and downward trends in unemployment and participation. 2013. handle: http://hdl.handle.net/10230/21220

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Resum

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.