1. U.S. labor force participation, growth and productivity in the last four recoveries
By Mun S. Ho*
Based on work with Dale Jorgenson* and Jon Samuels**
*Harvard University, and ** BEA
World KLEMS Conference 2018
Harvard University
June 4, 2018
The views expressed in this paper are solely those of the authors and are not necessarily those of the Bureau of Economic Analysis, U.S. Department of Commerce.

2. Motivation
The U.S. recovery from the Great Recession has been slow compared to previous recoveries:
1.9% p.a. for , compared to 4.5%, 3.2%, and 2.8% during , , (5-year spans).
Features of Great Recession recovery:
Very weak recovery of employment-population (EP) ratio.
EP(educated) improved faster than EP(noneduc) -> short term rise in labor quality
Slow growth of Total Factor Productivity.
Weak recovery of investment.
Our objectives
Give an industry-level Sources of Growth comparison of recoveries
Classify by education-intensity
Give an accounting of EP effects
Discuss role of above in growth projections

3. Sources of Growth 1947-2015 TFP accounted for ~20% of growth.
Capital Input predominate among Sources of Growth
Educated labor grew in importance.

4. Objective: Sources of Growth during last 4 Recoveries (5years after trough)
Next slides color these bars:
K,L, TFP Sources of Growth
Which industries contributed to this growth
Accounting for employment/pop

5. Sources of Aggregate Value-Added Growth during recoveries

6. Which industries contributed the most to these recoveries?

7. Education, Emp-Pop, and Industry Classification
Educ Intensive Industries
Industry
BA+ Share
Securities
68.5
Computer systems
68.2
Funds, trusts
67.5
Legal services
62.1
Educational svc
Misc. professional
61.5
Information svcs
56.4
Publishing
55.9
Mgmt of companies
52.6
Performing arts
47.3
Computer mfg
46.4
Motion picture
45.3
Insurance
43.9
Chemicals
42.6
Ambulatory health
41.9
Telecommunications
38.8
Oil and gas
38.1
Banks
37.8
Real estate
Other transp equip
37.3
Air transp
35.5
Hospitals
33.3
Federal govt
32.3
Petroleum prod
30.9
Education important driver of aggregate labor input and emp/pop trends
We develop new industry classification based on “skill” intensity.
Skill intensity: Share of Workers with a BA degree or above, 2007
Link education and industry performance during the recovery.

8. Industry Sources of Growth during recoveries

9. Industry Decomposition of the Sources of Aggregate VA Growth

10. Employment-population ratio, differences by Education and labor quality during Recoveries

11. Labor Force Participation Rate versus Employment-Population (age 25-54)
Emp/pop accounts for unemployment changes during the recovery
Simpler link to labor input:
Hours = hr/wk * E/P * Pop

12. Emp-pop and education Emp-pop depends critically on education
We construct emp/pop by sex, age, and education

13. Decomposition of Labor Input during Recoveries
EP continued falling in recovery
EP recovered slowly after Great Recession; small contribution in 5yr
Continued EP recovery is key to growth projections

14. Over the longer horizon, the TFP contribution differs significantly bet. Educ-int and non-Educ

15. Conclusions
The last 4 recoveries was steadily weaker; recovery was slowest (1.9%).
Growth accounting provides the contributions of K, L and TFP to the weakening recoveries.
In the Great Recession recovery:
Capital growth and TFP growth tiny relative to previous recov.
Emp-pop recovered slowly, but not drag on this recovery.
Less severe changes to Emp-pop of highly educated contributed to temporary rise in labor quality.
Over longer horizon big diff in TFP by Education-intensity
Next steps: projection model that incorporates these differences in emp-pop trends by sex-age-educ.