Barclays Debunks The Greatest 'Urban Legend' Of The Labor Market
The unemployment rate has been falling precipitously over the past several months, from 9.1 percent last summer, to 8.3 percent as of the January reading. There's a good chance it will fall to 8 percent or lower very soon.
But the unemployment rate these days always seems to carry with it an asterisk, because detractors like to point to this number: The Civilian Labor Force Participation Rate.
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All of this is a long way of getting to the fact that Barclays economists Dean Maki, Troy Davig, and Peter Newland have a brand new paper called Dispelling An Urban Legend, which blasts the idea that labor force participation is mostly being dragged down by depressed workforce exiles. Instead it's really mostly about the demographics.
Specifically, they write:
Consistent with our view, only a third of the drop in the labor force participation rate is accounted for by those who say they want a job, and only about 15% by those who want a job and are also of prime working age (ie, 25-54). Thus, we view the possibility of a large and sudden return of previously discouraged job seekers to the labor force as remote.
Read more:
http://www.businessinsider.com/barclays-debunks-the-greatest-urban-legend-of-the-labor-market-2012-3
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