Presentation is loading. Please wait.

Presentation is loading. Please wait.

The problem of US Labor force participation

Similar presentations


Presentation on theme: "The problem of US Labor force participation"— Presentation transcript:

1 The problem of US Labor force participation
By: Chad P. Bown and Caroline Freund

2 About the authors Bown Freund
Ph.D in Economics from University of Madison-Wisconsin Reginald Jones Senior Fellow at Peterson Institute for International Economics Freund Ph.D in Economics from Columbia Director of Macroeconomics, Trade, and Investment at The World Bank

3 Introduction Labor Force Participation – Labor Force (Employed & Unemployed) / # of Individuals of Working Age (15-64 in US) Sharp Decline in labor force participation, but better unemployment rates Cause Varies by Gender Male Structural, matches what is happening in other countries Structural plus disability insurance explain 1/3 of male participation decline Female Disability explains 2/3 of female participation decline Disability Insurance becoming an important form of assistance for long-term unemployed people

4 United States and Europe
Other countries have the same pressure of technology and trade OECD experienced a 4% increase, US down 1.8% from 1995 to 2017 Men see a slight decrease in participation everywhere Women see an increase except in US, where it has been flat or decreasing Americans more likely to leave labor force if they can’t find a job Other countries, people stay unemployed but stay in labor force US is close to others in share of prime-aged people that are employed This means people are not looking for jobs and therefore leave the labor force, lowering participation Unemployment numbers are deceiving

5 Canada and the United States
Canada – Employment rate increasing, also unemployment rate increasing People pushing to join labor force Incentives in Canada to stay in labor force don’t exist in US Average length of unemployment is over 6 months in US Canada is right around 4 months Longer unemployment means more discouraged workers Hard to convince people to reenter the work force once they have left

6 Labor Market and Disability Insurance
Disability Insurance more readily available than labor market adjustment assistance US has high expenditures but less support for unemployed workers Programs such as unemployment insurance, placement services, and skills training US has 40% increase in spending related to disability since 2000 Declines in most other countries over this period Decline in workplace injuries in private industries (3% in 2016, from 5% in 2002) 1984 laws made qualifying for disability easier Opioid Crisis – 1/3 of prime-aged non-participants take prescription pain meds

7 Regional Mobility More difficult to move away from distressed parts of the country More likely to move during strong economies Migration rates rise with education and fall with age Older, less skilled workers unlikely to move Likely not a policy priority

8 Conclusion Workers, especially men, are leaving the labor force:
Causes: Disability Insurance Financial Crisis of 2008 Long Unemployment Changing Structure of Market Opioid Crisis Incentive programs to stay in the labor force should help with the labor force participation rate

9 Opinion Free market has made disability more desirable, hurting work force People’s inability (or unwillingness) to adapt to different types of work and changing work climates lowers the participation rate Government programs can be an effective form of resolution However, this could cause a spike in unemployment rate Ultimately, benefits of keeping people in labor force outweigh costs

10 Questions?


Download ppt "The problem of US Labor force participation"

Similar presentations


Ads by Google