(Early) Monday DeLong Smackdown: Labor Force Participation Trends
Has the Longer Depression accelerated the trend of “losing” prime-age males, crowding what would have been a generation of the trend into a decade, as I suggested at the FRBB Conference and here in contradiction to what Alan Krueger and Gabriel Chodorow-Reich were saying? No. Or, rather, you could say it looked like that as of 2013 if you thought recovery was then substantially complete. You really cannot say that anymore.
The extremely sharp Gabriel Chodorow-Reich in Email:
Gabriel Chodorow-Reich: Prime age male by 5 year age bin: “Here is a figure and a table related to our back-and-forth…
…The figure shows the LFPR over time for 25-54 year-old men split into 5 year age bins. (The data are the published BLS data with no adjustments for population controls, I have smoothed and deseasonalized by taking a trailing 12 month moving average.) The dashed lines are the OLS trends estimated using data from 1976-2007.
What I take from the figure is that except for the 25-29 and 30-34 groups, the 1976-2007 trend fits the 2016 value pretty well. As I said in my discussion, I’m not a huge fan of blindly taking trends and extrapolating. But for the question of whether 2007-16 is unusual this seems a reasonable approach.
There is a large deviation from the prior trend for the 25-29 and 30-34 male age groups. The table, which was in my discussion slides, focuses on this group. The plurality of the decline in participation is due to increased schooling. This seems benign. The increase in those reporting disability is less so. Using 2000 as a benchmark, the transition rates back into employment for this group also seem more elastic to a tighter labor market, which is consistent with other evidence.
Cf.: My earlier post:
Note to Self from Boston Harborside: Alan Krueger and Gabriel Chodorow-Reich both assure me that, to them, it does not look like the decline in prime-age male employment was materially accelerated by what I now call the Longer Depression. I don’t see it here. Are the changes in the age distribution within the category of 25-54 year olds over the past 40 years large enough to make this chart misleading? I cannot see it. I know that one disputes labor numbers with Alan Krueger (or Gabriel Chodorow-Reich) at one’s peril. But it looks to me like we were losing 1.25%/decade as far as prime-age male employment was concerned. And that in the past decade we have lost 3.25%–25 years’ worth of the trend in 10…