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(Early) Monday DeLong Smackdown: Labor Force Participation Trends

Prime age male for brad pdf

Has the Longer Depression accelerated the trend of "losing" prime-age males, crowding what would have been a generation of the trend into a decade, as I suggested at the FRBB Conference and here in contradiction to what Alan Krueger and Gabriel Chodorow-Reich were saying? No. Or, rather, you could say it looked like that as of 2013 if you thought recovery was then substantially complete. You really cannot say that anymore.

The extremely sharp Gabriel Chodorow-Reich in Email:

Gabriel Chodorow-Reich: Prime age male by 5 year age bin: "Here is a figure and a table related to our back-and-forth...

...The figure shows the LFPR over time for 25-54 year-old men split into 5 year age bins. (The data are the published BLS data with no adjustments for population controls,  I have smoothed and deseasonalized by taking a trailing 12 month moving average.) The dashed lines are the OLS trends estimated using data from 1976-2007.

What I take from the figure is that except for the 25-29 and 30-34 groups, the 1976-2007 trend fits the 2016 value pretty well.  As I said in my discussion, I'm not a huge fan of blindly taking trends and extrapolating.  But for the question of whether 2007-16 is unusual this seems a reasonable approach.  

There is a large deviation from the prior trend for the 25-29 and 30-34 male age groups.  The table, which was in my discussion slides, focuses on this group.  The plurality of the decline in participation is due to increased schooling. This seems benign.  The increase in those reporting disability is less so.  Using 2000 as a benchmark, the transition rates back into employment for this group also seem more elastic to a tighter labor market, which is consistent with other evidence.

Prime age male for brad pdf


Cf.: My earlier posts:

Note to Self from Boston Harborside: Alan Krueger and Gabriel Chodorow-Reich both assure me that, to them, it does not look like the decline in prime-age male employment was materially accelerated by what I now call the Longer Depression. I don't see it here. Are the changes in the age distribution within the category of 25-54 year olds over the past 40 years large enough to make this chart misleading? I cannot see it. I know that one disputes labor numbers with Alan Krueger (or Gabriel Chodorow-Reich) at one's peril. But it looks to me like we were losing 1.25%/decade as far as prime-age male employment was concerned. And that in the past decade we have lost 3.25%--25 years' worth of the trend in 10...

Employment Rate Aged 25 54 Males for the United States© FRED St Louis Fed


The Prime-Age Men Missing from the Labor Force...:

Two comments:

First, on non-participation of prime-age males:

  • We lost 22% of 55-64 male labor force participation 1958-1995...
  • Then that stopped: since 1995 we have gained 4% in 55-64 male labor force participation...
  • We were losing 1.2%-points of 25-54 prime-age male employment and labor force participation every decade....
  • Then we lost 7%-points of prime-age male employment in two years...
  • Now, seven years into the recovery, nearly a decade later we have gotten back to normal as far as the unemployment rate is concerned, but we are still 1.8%-points low of trend as far as prime-age male employment and participation is concerned...
  • We have crowded a generation's worth of this shedding prime-age male participation process into a decade...
  • Is not the natural reading that the labor market shock of 2008-9 made a lot of people permanently sick, disabled, depressed, disconnected?
  • If not the psychological and sociological consequences of the Great Recession and Elusive Recovery, what else could have caused the speed-up of this process?
  • If anyone has an alternative story for the speed-up of this process, I would like to hear it...

Second, on video games and pain medication:

  • There was a time when I had to decide whether I would win regularly at God level on the computer game Civilization or be an affective Deputy Assistant Secretary of the Treasury...
  • Back then I microwaved my CD-ROM...
  • But I am up to about one Aleve every three days, so the lesson I take away from Alan is: I need to watch out...

Justin Fox: Not Working Makes People Sick: "Overall, men are less likely to be taking pain medication than women...

...But men who have dropped out of the labor force are much more likely to be taking pain meds than either other men or the women who've dropped out.... Most women who aren't in the labor force are still working, just not for pay. Most men... simply aren't working.... Half of the men not in the labor force... reporting that they were ill.... The ill-or-disabled percentage of the overall prime-age population wasn't all that much higher for men (5.6 percent) than for women (5.4 percent).

Back in the 1950s and 1960s, about 97 percent of prime-age men either had jobs or were actively looking for them. Work has gotten less hazardous and physically demanding since then, not more. So how can it be that 5.6 percent of prime-age men report being out of the labor force now because of illness or disability, while only 3 percent were out of the labor force for any reason in the early 1960s?... A lot of it... is because long-term unemployment and inactivity make people sick.... Men who aren't in the labor force spent an average of five and a half hours a day watching television and movies in 2014, compared with about two hours a day for working men and three and a half for unemployed men. That's not exactly healthy.

It seems like vicious cycle. Men who drop out of the labor force--maybe initially for health reasons, maybe not--fall into lifestyles that render them ever less capable of rejoining it. (This may be true of a lot of women, too, but their characteristics are harder to nail down because of the split between those who are truly out of work and those with home responsibilities.) Getting them back into the labor force seems like it ought to be a national priority. But it's not going to be easy.

Alan Krueger: Where Have All the Workers Gone?: "The Great Recession was accompanied by a noticeable decline in labor force participation, even among the prime working-age population...

...How much of this decline can be expected to reverse? Is a further tightening of the labor market a precondition for a much stronger rebound in participation? Is the lack of participation the consequence of a rise in the reservation wage or a fall in the market wage? Does it reflect a mismatch of skills? Would retraining programs be an effective tool to bring more people back into the labor force?

Alan B Krueger pdf

Alan B Krueger pdf

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