A Cohort-Based Model of Labor Force Participation

Bruce C. Fallick, Jonathan F. Pingle
2007 Social Science Research Network  
The probability that an individual participates in the labor force declines precipitously beyond age 50. This feature of labor supply suggests that ongoing shifts in the age distribution of the population will put substantial downward pressure on the aggregate labor force participation rate. However, the aggregate rate is also influenced by trends within age groups. Neglecting to model both within-group influences and shifting population shares will doom any estimate of aggregate labor supply.
more » ... gate labor supply. We develop a model that identifies birth cohorts' propensities to participate, uses these propensities to derive age-specific trends in participation rates, and explicitly incorporates the influence of shifting population shares in estimating aggregate labor force participation.
doi:10.2139/ssrn.982582 fatcat:x62taznr7nc33blrfnskzepm3m