Saturday, March 7, 2015

Labor Force Participation is Secular: Unemployment is Cyclical!

Updated data at the request of Andrew Sentence on participation and unemployment in the U.S.  
Business cycles are about unemployment; not about changes in the participation rate.
(c) Roger E. A. Farmer March 2015
See my twitter posts today on this topic. 

If people choose to look for a job; that's their business. If people can't find a job; that's our collective business as a society.
Participation is a voluntary choice.  Unemployment is not. 
The idea that unemployment is voluntary is classical nonsense.
Anybody want to explain to me why they think labor force participation is a cyclical phenomenon?
Participation is not cyclical! Unemployment is!  
The secular trend in participation dwarfs the cyclical movement. That's an important fact! 
Follow me on twitter @farmerrf 

1 comment:

  1. In principle discouraged workers could be cyclical, and there can be structural changes in almost anything, including unemployment (look at cross-country variation), but it's still surprising how little of either shows up in the data.


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