Recent Us Labor Force Participation Dynamics: Reversible or Not? 1 A. Introduction 1. The U.S. labor force participation rate (LFPR) fell dramatically following the Great Recession and has yet to start recovering ( Figure 1 ). Indeed, the current LFPR of 62.8 percent is the lowest rate since 1978. Taking a longer view of LFPR dynamics yields some important background to the recent decline ( Figure 2 ). In particular, the LFPR increased sharply from just below 60 percent in the early 60s to above 66 percent by 1990, largely reflecting the baby boom
I. Introduction The U.S. labor force participation rate (LFPR) fell dramatically following the Great Recession and has yet to start recovering ( Figure 1 ). Indeed, the current LFPR of 62.8 percent is around the lowest rate since 1978. Taking a longer view of LFPR dynamics yields some important background to the recent decline ( Figure 2 ). In particular, the LFPR increased sharply from just below 60 percent in the early 60s to above 66 percent by 1990, largely reflecting the baby boom generation (especially women) entering the labor force. Over the 1990s
-time high at 67.3 percent in 2000) and subsequently entered a secular decline (following the 2001 recession). This downward movement accelerated following the global financial crisis. Labor Force Participation Rate (percent) Sources: Bureau of Labor Statistics, Haver Analytics; IMF staff estimates. LFPR dynamics are a complex combination of both structural factors (population aging or delayed retirement) and cyclical factors (largely related to the availability of jobs). Staff’s demographic models suggest that aging explains around 50 percent of the LFPR