The decline in labor force participation in US – What the Economic Report of the President says

The decline in labor force participation between the fourth quarter of 2007 and the fourth quarter of 2014 can be decomposed into three parts: an aging population, the economic downturn, and a residual that is attribut‐ able to other factors. Figure 3‐6 shows the decomposition of this decline over time based on CEA modeling. By the close of 2014, the participation rate was down 3.2 percentage points since the end of 2007. Of this, CEA analysis attributes 1.7 points to long‐run aging trends, and 0.5 point to poor business‐cycle conditions. The remaining 0.9 point is not due to either standard business cycle or aging trends. This residual component emerged in 2012 and grew over the subsequent few years.

Chosen excerpts by Job Market Monitor. Read the whole story at 2015 Economic Report of the President | The White House. – Chapter 3: Achievements and Challenges in the U.S. Labor Market