2019年-PIIE彼得森国际经济研究所_problem-us-labor-force-participation_10页_489kb

19-1 The Problem of US Labor Force Participation Summary

Core Content

This paper by Chad P. Bown and Caroline Freund examines the decline in the United States' labor force participation rate (LFPR) among prime-aged workers (aged 25–54) between 1995 and 2017, despite the country's relatively strong economic growth compared to many European and Asian advanced economies. The authors highlight that the decline in LFPR is not due to a lack of economic activity but rather to structural changes and the increasing reliance on disability insurance as a substitute for traditional labor market support programs.

Main Points

• Labor Force Participation Decline:
  The US LFPR for prime-aged workers fell by 1.8 percentage points between 1995 and 2017, while most other advanced economies saw increases. This decline has been more pronounced for men than for women, but disability has been a major factor for both groups.

• Disability Insurance as a Substitute:
  The US has seen a significant rise in the number of workers receiving disability insurance, especially among men and women. Disability insurance has become a critical support mechanism for the long-term unemployed, contributing to the exit from the labor force. For men, disability and structural changes account for about one-third of the decline, while for women, disability explains nearly two-thirds of the drop in LFPR.

• Unemployment vs. Labor Force Exit:
  In the US, job loss has led to labor force exit rather than increased unemployment, which is the case in most other advanced economies. This is partly due to the structure of US labor market policies, which provide more support to those exiting the labor force than to those who remain unemployed.

• Opioid Crisis and Disability:
  The opioid crisis has played a significant role in the rise of disability claims, particularly among prime-aged men. There is a strong link between increased opioid use and the likelihood of workers leaving the labor force, suggesting that health policy and access to opioids have influenced labor market outcomes.

• Regional Mobility:
  Declining regional mobility in the US has made it harder for workers in struggling regions to move to areas with more economic activity. This has contributed to the overall weakness in labor force participation, as workers are unable to relocate to find work.

• Comparison with Other Countries:
  The paper compares the US with Canada and other OECD countries, noting that the US has experienced a more severe decline in LFPR. In Canada, the decline in employment is largely due to increased unemployment, whereas in the US, the drop in LFPR is driven by a combination of structural changes and disability insurance.

Key Information

• Unemployment Rate:
  The US unemployment rate has declined to pre-crisis levels, but this is due to a large number of workers leaving the labor force rather than finding jobs.

• Impact of Financial Crisis:
  The financial crisis of 2007–08 led to a significant drop in labor demand, which in turn caused long unemployment spells. These spells have been a key driver of labor force exit in the US, especially among men.

• Public Expenditure on Labor Market Policies:
  The US spends less on labor market adjustment programs such as unemployment insurance, job placement services, and training compared to other OECD countries. In contrast, it spends more on disability and sickness benefits.

• Role of Disability Insurance:
  Disability insurance has become an important form of support for the long-term unemployed, particularly in the US. This has led to a shift in labor market outcomes, with more workers exiting the labor force than remaining unemployed.

• Policy Implications:
  The paper suggests that the US could benefit from expanding active labor market policies to help workers remain in the labor force during economic downturns. A companion paper will explore successful policies in other countries that have helped maintain labor force participation.

Conclusion

The decline in US labor force participation is not solely due to economic weakness but is also influenced by structural changes and the availability of disability insurance. The US unemployment rate may appear strong, but this is misleading as it reflects a significant number of workers who have exited the labor force. Addressing this issue requires a reevaluation of labor market policies to ensure they support workers in remaining employed, especially during periods of economic adjustment.

Appendix Summary

• Definitions:
  • Working-age population: 15 to 64 years.
  • Employed persons: Those who worked at least one hour in the previous week or had a job but were absent.
  • Unemployed persons: Those without work, available for work, and actively seeking employment.
  • Labor force: Includes employed and unemployed individuals.
  • Labor force participation rate: Labor force divided by working-age population.
  • Employment rate: Employed population divided by working-age population.
  • Unemployment rate: Unemployed population divided by labor force.
  • Average unemployment duration: The average number of months a person was unemployed and seeking work.
  • Manufacturing as a share of employment: Number of people employed in manufacturing divided by total employed population.
  • Public expenditure on labor market programs: Includes employment services, training, hiring subsidies, and direct job creation.
  • Disability and sickness cash benefits: Cash payments for inability to work due to disability or illness.

References

• Autor, David, and Mark Duggan (2003): The Rise in the Disability Rolls and the Decline in Unemployment.
• Bown, Chad P., and Caroline Freund (2019, forthcoming): Why the United States Needs Active Labor Market Policies.
• Case, Anne, and Angus Deaton (2015): Rising morbidity and mortality in midlife among white non-Hispanic Americans.
• CEA (Council of Economic Advisers) (2016): The Long-term Decline in Prime Age Male Labor Force Participation.
• Freund, Caroline, and Christine McDaniel (2017): The US Needs to Invest in Minds not Miners.
• Haver Analytics (2018): Employment by Industry.
• Kaplan, Greg, and Sam Schulhofer-Wohl (2012): Interstate Migration Has Fallen Less Than You Think.
• Krueger, Alan B. (2017): Where Have All the Workers Gone?
• OECD (2018a–f): Various labor market statistics and public expenditure reports.
• Powell, David, Rosalie Liccardo Pacula, and Erin Taylor (2015): How Increasing Medical Access to Opioids Contributes to the Opioid Epidemic.
• Saks, Raven E., and Abigail Wozniak (2011): Labor Reallocation over the Business Cycle.
• Schnell, Molly, and Janet Currie (2018): Addressing the Opioid Epidemic.
• SSA (Social Security Administration) (2015–2018): Reports and statistics on disability insurance and labor force participation.