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Declining labor force attachment and downward trends in unemployment and participation
Barnichon, Régis; Figura, Andrew
Universitat Pompeu Fabra. Departament d'Economia i Empresa
The US labor market witnessed two apparently unrelated secular movements in thelast 30 years: a decline in unemployment between the early 1980s and the early 2000s,and a decline in participation since the early 2000s. Using CPS micro data and a stock-flow accounting framework, we show that a substantial, and hitherto unnoticed, factorbehind both trends is a decline in the share of nonparticipants who are at the margin ofparticipation. A lower share of marginal nonparticipants implies a lower unemploymentrate, because marginal nonparticipants enter the labor force mostly through unemployment,while other nonparticipants enter the labor force mostly through employment.
Macroeconomics and International Economics
marginal participant
want a job
stock-flow decomposition.
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