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Working Paper
Labor Force Participation: Recent Developments and Future Prospects
Since 2007, the labor force participation rate has fallen from about 66 percent to about 63 percent. The sources of this decline have been widely debated among academics and policymakers, with some arguing that the participation rate is depressed due to weak labor demand while others argue that the decline was inevitable due to structural forces such as the aging of the population. In this paper, we use a variety of approaches to assess reasons for the decline in participation. Although these approaches yield somewhat different estimates of the extent to which the recent decline in ...
Working Paper
Labor Force Participation: Recent Developments and Future Prospects
Since 2007, the labor force participation rate has fallen from about 66 percent to about 63 percent. The sources of this decline have been widely debated among academics and policymakers, with some arguing that the participation rate is depressed due to weak labor demand while others argue that the decline was inevitable due to structural forces such as the aging of the population. In this paper, we use a variety of approaches to assess reasons for the decline in participation. Although these approaches yield somewhat different estimates of the extent to which the recent decline in ...
Working Paper
Using Payroll Processor Microdata to Measure Aggregate Labor Market Activity
We show that high-frequency private payroll microdata can help forecast labor market conditions. Payroll employment is perhaps the most reliable real-time indicator of the business cycle and is therefore closely followed by policymakers, academia, and financial markets. Government statistical agencies have long served as the primary suppliers of information on the labor market and will continue to do so for the foreseeable future. That said, sources of ?big data? are becoming increasingly available through collaborations with private businesses engaged in commercial activities that record ...
Working Paper
Improving the Accuracy of Economic Measurement with Multiple Data Sources: The Case of Payroll Employment Data
This paper combines information from two sources of U.S. private payroll employment to increase the accuracy of real-time measurement of the labor market. The sources are the Current Employment Statistics (CES) from BLS and microdata from the payroll processing firm ADP. We briefly describe the ADP-derived data series, compare it to the BLS data, and describe an exercise that benchmarks the data series to an employment census. The CES and the ADP employment data are each derived from roughly equal-sized samples. We argue that combining CES and ADP data series reduces the measurement error ...
Working Paper
Human Capital and Unemployment Dynamics: Why More Educated Workers Enjoy Greater Employment Stability
Why do more educated workers experience lower unemployment rates and lower employment volatility? A closer look at the data reveals that these workers have similar job finding rates, but much lower and less volatile separation rates than their less educated peers. We argue that on-the-job training, being complementary to formal education, is the reason for this pattern. Using a search and matching model with endogenous separations, we show that investments in match-specific human capital reduce the outside option of workers, implying less incentives to separate. The model generates ...
Working Paper
Racial Gaps in Labor Market Outcomes in the Last Four Decades and over the Business Cycle
We examine racial disparities in key labor market outcomes for men and women over the past four decades, with a special emphasis on their evolution over the business cycle. Blacks have substantially higher and more cyclical unemployment rates than whites, and observable characteristics can explain very little of this differential, which is importantly driven by a comparatively higher risk of job loss. In contrast, the Hispanic-white unemployment rate gap is comparatively small and is largely explained by lower educational attainment of (mostly foreign-born) Hispanics. Regarding labor force ...
Working Paper
Tracking Labor Market Developments during the COVID-19 Pandemic: A Preliminary Assessment
Many traditional official statistics are not suitable for measuring high-frequency developments that evolve over the course of weeks, not months. In this paper, we track the labor market effects of the COVID-19 pandemic with weekly payroll employment series based on microdata from ADP. These data are available essentially in real-time, and allow us to track both aggregate and industry effects. Cumulative losses in paid employment through April 4 are currently estimated at 18 million; just during the two weeks between March 14 and March 28 the U.S. economy lost about 13 million paid jobs. ...
Working Paper
Reconciling Unemployment Claims with Job Losses in the First Months of the COVID-19 Crisis
In the spring of 2020, many observers relied heavily on weekly initial claims for unemployment insurance benefits (UI) to estimate contemporaneous reductions in US employment induced by the COVID-19 pandemic. Though UI claims provided a timely, high-frequency window into mounting layoffs, the cumulative volume of initial claims filed through the May reference week substantially exceeded realized reductions in payroll employment and likely contributed to the historically large discrepancy between consensus expectations of further April-to-May job losses and the strong job gains reflected in ...
Working Paper
The Long-Lived Cyclicality of the Labor Force Participation Rate
How cyclical is the U.S. labor force participation rate (LFPR)? We examine its response to exogenous state-level business cycle shocks, finding that the LFPR is highly cyclical, but with a significantly longer-lived response than the unemployment rate. The LFPR declines after a negative shock for about four years—well beyond when the unemployment rate has begun to recover—and takes about eight years to fully recover after the shock. The decline and recovery of the LFPR is largely driven by individuals with home and family responsibilities, as well as by younger individuals spending time ...
Working Paper
Are Manufacturing Jobs Still Good Jobs? An Exploration of the Manufacturing Wage Premium
This paper explores the factors behind the disappearance of the manufacturing wage premium—the additional pay a manufacturing worker earns relative to a comparable nonmanufacturing worker. With substantially larger declines across union members, we quantify the role of unionization by exploiting the heterogeneity in membership status across manufacturing industries. We find that the decline in union membership explains more than 70 percent of the decline in the wage premium since the 1990s for union members but does not affect nonunion premia. Our findings suggest that the erosion of ...