A behavioral model for projecting the labor force participation rate

Monthly Labor Review

Volumn 134, Issue 5, 2011, Pages 25-42

  Toossi, Mitra ^a  

^a BUREAU OF LABOR STATISTICS   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 79959414383     PISSN: 00981818     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (49)

1. The Budget and Economic Outlook: Fiscal Years 2010 to 2020 (Congressional Budget Office, January 2010) (see especially p. 39), http://www.cbo.gov/ftpdocs/108xx/doc10871/01-26-Outlook.pdf (visited Mar. 7, 2010).
2. For further information, see "Employment Projections,"chapter 13 in BLS Handbook of Methods (U.S. Bureau of Labor Statistics, 1999), http://www.bls.gov/opub/hom/homch13_a.htm (visited Feb. 7, 2010).
3. All of the information on the Census Bureau's interim population projections presented in this article is from "U.S. Population Projections: 2008 National Population Projections" (U.S. Census Bureau, no date), http://www.census.gov/population/www/projections/2008projections.html (visited Jan. 7, 2010).
4. The article uses the 2008 National Population Projections released on August 14, 2008. The 2009 National Population Projections are a supplemental series to the 2008 series and provide various results based on different assumptions regarding international migration; all other methodological considerations and assumptions, including assumptions about mortality and fertility, are the same as those used in the 2008 National Population Projections. The 2009 series is useful for analyzing possible outcomes due to different levels of net international migration. The 2008 series, however, remains the Census Bureau's rec-ommended series for data users.
5. The projections of the Armed Forces and institutional population according to age, gender, race, and ethnicity for 2008-18 are based on the Census Bureau's estimations.
6. The CPS is a personal-interview survey conducted monthly by the Census Bureau for the Bureau of Labor Statistics. The sample consists of about 60,000 households selected to represent the U.S. civilian noninstitutional population 16 years and older.
7. For more information, see Paul F. Velleman, "Definition and comparison of robust nonlinear data smoothing algorithms," Journal of the American Statistical Association, September 1980, pp. 609-15.
8. See Howard N Fullerton, Jr., "Notes on BLS labor force projections model," unpublished manuscript (U.S. Bureau of Labor Statistics, 2000).
9. For further information, see "Employment Projections" in BLS Handbook of Methods.
10. H. O. Stekler and Rupin Thomas, "Evaluating BLS labor force, employment, and occupation projections for 2000," Monthly Labor Review, July 2005, pp. 46-56, http://www.bls.gov/opub/mlr/2005/07/art5full.pdf (visited Aug. 9, 2010).
11. Howard N Fullerton, Jr., "Evaluating the BLS labor force projections to 2000," Monthly Labor Review, October 2003, pp. 3-12, http://www.bls.gov/opub/mlr/2003/10/art1full.pdf (visited May 7, 2010).
12. See Stekler and Thomas, "Evaluating BLS labor force.".
13. A naïve model assumes that the growth of the labor force in the next 10 years will equal that of the previous 10 years.
14. See Fullerton, "Evaluating the BLS labor force projections".
15. Ian D. Wyatt, "Evaluating the 1996-2006 employment projections," Monthly Labor Review, September 2010, pp. 33-69, http://www.bls.gov/opub/mlr/2010/09/art3full.pdf (visited Oct. 8, 2010).
16. See Wyatt, "Evaluating the 1996-2006 employment projections.".
17. The behavioral model presented here has benefited from a similar model set forth by Dan Schrier in "British Columbia labor force participation rate model" (BC Stats, Ministry of Finance and Corporate Relations, Government of British Columbia, June 2000).
18. See Julius Shiskin, "Employment and unemployment: the doughnut or the hole?" Monthly Labor Review, February 1976, pp. 3-10.
19. See Carol Boyd Leon, "The employment-population ratio: its value in labor force analysis, Monthly Labor Review, February 1981, pp. 36-45, http://www.bls.gov/opub/mlr/1981/02/art4full.pdf (visited Oct. 10, 2010).
20. See Gary Becker, The Economic Approach to Human Behavior (Chicago, University of Chicago Press, 1976).
21. By definition, the reservation wage is the lowest wage at which a worker would be willing to accept a particular type of job. A job offer involving the same type of work and the same working conditions, but at a lower wage, would be rejected by the worker. An individual's reservation wage may change over time, depending on a number of factors, such as changes in the individual's overall wealth, marital status, or living arrangements; the length of time the person is unemployed; and health and disability issues.
22. Becker, The Economic Approach.
23. See also Gary Becker, A Treatise on the Family (Cambridge, MA, Harvard University Press, 1980).
24. See, for example, Claudia Goldin, "The Quiet Revolution That Transformed Women's Employment, Education, and Family," Richard T. Ely Lecture, published in American Economic Review, May 2006, pp. 1-21, http://www.economics.harvard.edu/faculty/goldin/files/GoldinEly.pdf (visited Sept. 3, 2010).
25. See Abraham Mosisa and Steven Hipple, "Trends in labor force participation in the United States," Monthly Labor Review, October 2006, pp. 35-57, http://www.bls.gov/opub/mlr/2006/10/art3full.pdf (visited Aug. 10, 2010).
26. Besides their own finding regarding the connection between falling teenage labor force participation and increasing school attendance, Mosisa and Hipple cite the work of other researchers who have come to the same conclusion.
27. David Aaronson, Kyung-Hong Park, and Daniel Sullivan, "Explaining the Decline in Teen Labor Force Participation," Chicago Fed Letter, no. 234 (Chicago, Federal Reserve Bank of Chicago, January 2007).
28. Reuben Gronau, "Leisure, Home Production, and Work-the theory of allocation of time revisited," Journal of Political Economy, December 1977, 1099-1123.
29. See Mitra Toossi, "Labor force projections to 2016: more workers in their golden years," Monthly Labor Review, November 2007, pp. 33-52, http://www.bls.gov/opub/mlr/2007/11/art3full.pdf (visited June 3, 2010).
30. For a detailed discussion of the projection of the U.S. economy, see Betty W. Su, "The U.S. economy to 2016: slower growth as boomers begin to retire," Monthly Labor Review, November 2007, pp. 13-32, http://www.bls.gov/opub/mlr/2007/11/art2full.pdf (visited Apr. 9, 2010).
31. Katie Kirkland, "Declining teen labor force participation," Issues in Labor Statistics, Summary 02-06 (U.S. Bureau of Labor Statistics, September 2002).
32. (See also Steven Hipple, "Labor force participation during recent labor market downturns," Issues in Labor Statistics, Summary 03-03 (U.S. Bureau of Labor Statistics, September 2003).
33. See Aaronson, Park, and Sullivan, "Explaining the Decline.".
34. See Mosisa and Hipple, "Trends in labor force participation.".
35. See Melody Sheehan, The Effect of Real Wage Rates on Female LFPR, vol. V (La Crosse, WI, University of Wisconsin, 2002).
36. See David H. Autor and Mark G. Duggan, "The rise in disability recipiency and the decline in unemployment," NBER working paper 8336 (Cambridge, MA, National Bureau of Economic Research, 2001).
37. CBO's projection of the Labor Force (Congressional Budget Office, September 2004).
38. See "Table A1. Marital Status of People 15 Years and Over, by Age, Sex, Personal Earnings, Race, and Hispanic Origin, 2009" (U.S. Census Bureau, January 2010), http://www.census.gov/population/socdemo/hh-fam/cps2009/tabA1-all.xls (visited July 7, 2010).
39. See "Table MS-2. Estimated Median Age at First Marriage, by Sex: 1890 to Present" (U.S. Census Bureau, Sept. 15, 2004), http://www.census.gov/population/socdemo/hh-fam/tabMS-2.pdf (visited May 17, 2011).
40. See Betsey Stevenson and Justin Wolfers, "Marriage and Divorce: Changes and Their Driving Forces," Journal of Economic Perspectives, spring 2007, pp. 27-57.
41. Mosisa and Hipple, "Trends in labor force participation.".
42. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 changed the Nation's welfare system into one that requires work in exchange for time-limited assistance. The bill contains strong work requirements, a performance bonus to reward States for moving welfare recipients into jobs, State maintenance-of-effort requirements, comprehensive child support enforcement, and supports for families moving from welfare to work, including increased funding for childcare and guaranteed health care coverage. These changes encourage single mothers to enter the labor force.
43. For more information on the impact of welfare reform, see The National Evaluation of the Welfare-to-Work Grants Program: Final Report (Princeton, NJ, Washington, DC, and Cambridge, MA, Mathematica Policy Research, Inc., September 2004).
44. Robert F. Schoeni and Rebecca M. Blank, "What Has Welfare Reform Accomplished? Impacts on Welfare Participation, Employment, Income, Poverty, and Family Structure," Working Paper No. 7627 (Cambridge, MA, National Bureau of Economic Research, March 2000).
45. See Becker, A Treatise on the Family.
46. Jacob Mincer, "Labor Force Participation of Married Women," in National Bureau of Economic Research, Aspects of Labor Economics (Princeton, NJ, Princeton University Press, 1962), pp. 63-106.
47. The Budget and Economic Outlook, p. 39.
48. See Mitra Toossi, "Labor force projections to 2018: older workers staying more active," Monthly Labor Review, November 2009, pp. 30-51, http://www.bls.gov/opub/mlr/2009/11/home.htm (visited Apr. 3, 2010).
49. See Kenneth J. Matheny, "Trends in the Aggregate Labor Force," Federal Reserve Bank of St. Louis Review, July/August 2009, pp. 297-309.