Elsewhere I have read that the workforce participation rate is highly correlated with growth in GDP. This makes intuitive sense, as you'd expect that if more people are working, they'd produce more. The converse must also be true: if there are less people working, then they'd produce less – and the GDP growth rate would be slower.
I entered the workforce in the late '60s, when the workforce participation rate for men was around 78%. Today it's around 65%. Given that there are about 158 million men in the U.S. today, the difference between 78% and 65% is about 21 million men. If the workforce participation rate was still 78% today, there would be about 21 million more men working. That's an astonishingly large number.
Why has the workforce participation rate gone down? I can think of several contributing factors, but I really have no idea about their relative size:
- More women are in the workforce today (proportionally), and surely some of them have displaced men.
- The rise of the welfare state has reduced the incentive (and need) to be employed.
- More men (proportionally) are going to college, and are therefore entering the workforce later.
- Men are living longer after retirement, when they are not part of the workforce.
- Possibly there is some measurement error, with older data not including illegal or migratory immigrants.
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