Mr. Ravi Balakrishnan, Mai Dao, Mr. Juan Sole, and Jeremy Zook
group and gender. Below we present the results of both approaches, with a more detailed description of the methodologies and robustness checks in Annex I.
A. Population Models
In our first population model we estimate the “demographic effect” of the participation rate decline by holding the participation rate of each age group constant at the level of a particular year—namely 2007 in our analysis—and letting the population shares of each group vary according to history. Doing so allows us to construct the aggregateparticipationrate that would have been
addition, there is a substantial body of work suggesting the presence of a number of structural factors.
5. Ongoing shifts in the age composition of the workforce tend to depress the aggregateparticipationrate . As labor market participation tends to be the highest for prime-age workers, and tapers off as workers get closer to retirement ( Figure 2 ), a shift towards a larger share of mature workers may act as a drag on the aggregateparticipationrate. 8 With the leading edge of the baby boomers just two years away from retirement, the
strengthening Canada’s financial system in line with the recommendations of the 2013 Financial Sector Assessment Program update.
Box 1.1 Recent Trends in the U.S. Labor Force: The Role of the Hispanic Population
Since the 1940s, the U.S. labor force has experienced important changes that mirror developments in American society, in particular increasing numbers of working women and the life cycle of the baby boom generation. These developments brought the aggregateparticipationrate—the ratio of people employed or seeking jobs divided by the noninstitutional civilian
Mr. Francesco Grigoli, Zsoka Koczan, and Petia Topalova
Advanced economies are in the midst of a major demographic transition, with the number of elderly rising precipitously relative to the working-age population. Yet, despite the acceleration in demographic shifts in the past decade, advanced economies experienced markedly different trajectories in overall labor force participation rates and the workforce attachment of men and women. Using a cohort-based model of labor force participation for 17 advanced economies estimated over the 1985-2016 period, we document a significant role of common patterns of participation over the life cycle and shifts in these patterns across generations for aggregate labor supply, especially in the case of women. The entry of new cohorts of women led to upward shifts in the age participation prole, boosting aggregate participation rates. However, this process plateaued in most advanced economies, with signs of reversal in some. Using the model's results to forecast future participation trends, we project sizable declines in aggregate participation rates over the next three decades due to the aging of the population. Illustrative simulations show that implementing policies encouraging labor supply can help attenuate but may not fully offset demographic pressures.
is the better income prospects. There are two reasons why this view does not seem plausible. First, the figure shows that the increase in the participation rate accelerates at a time when the performance of real wages declines in 1999-2000. Second, while the aggregateparticipationrate increased during the 1990s, the participation rate of the HoF fell more than 3 percentage points. A priori, there is no reason to believe that people characterized as HoF perceived the increase in real wages differently than other people. 22
Figure 1(c). Colombia: Real Wage and
Gains in labor force participation rates in Chile have slowed in recent years. We examine their determinants using a cohort-model analysis. Allowing for both age- and cohort-specific effects in the context of a seemingly unrelated regression equations (SURE) approach, we find that age factors play an important role in determining participation decisions, especially for males. For females, we find that strong positive time trends dominate the downward pressure from demographics, although those trends have recently dissipated. In addition, we find that both cohort effects and the business cycle shape participation decisions. Using our cohort-based analysis, we construct projections of participation rates, which suggest population aging will put downward pressure on labor inputs, and thus potential output, in coming years. Further increases in female labor force participation—supported by policies— could more than offset the downward pressure from demographics.
Japan's potential growth rate is steadily falling with the aging of its population. This paper explores the extent to which raising female labor participation can help slow this trend. Using a cross-country database we find that smaller families, higher female education, and lower marriage rates are associated with much of the rise in women's aggregate participation rates within countries over time, but that policies are likely increasingly important for explaining differences across countries. Raising female participation could provide an important boost to growth, but women face two hurdles in participating in the workforce in Japan. First, few working women start out in career-track positions, and second, many women drop out of the workforce following childbirth. To increase women’s attachment to work Japan should consider policies to reduce the gender gap in career positions and to provide better support for working mothers.