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A Cohort-Based Analysis of Labor Force Participation for Advanced Economies, Francesco Grigoli, Zsoka Koczan, Petia Topalova

Abstract
Advanced economies are in the midst of a major demographic transition, with the number of elderly rising precipitously relative to the working-age population. Yet, despite the acceleration in demographic shifts in the past decade, advanced economies experienced markedly different trajectories in overall labor force participation rates and the workforce attachment of men and women. Using a cohort-based model of labor force participation for 17 advanced economies estimated over the 1985-2016 period, we document a significant role of common patterns of participation over the life cycle and shifts in these patterns across generations for aggregate labor supply, especially in the case of women. The entry of new cohorts of women led to upward shifts in the age participation profile, boosting aggregate participation rates. However, this process plateaued in most advanced economies, with signs of reversal in some. Using the model's results to forecast future participation trends, we project sizable declines in aggregate participation rates over the next three decades due to the aging of the population. Illustrative simulations show that implementing policies encouraging labor supply can help attenuate but may not fully offset demographic pressures
Table Of Contents
Cover -- Contents -- 1 Introduction -- 2 Data and Methodology -- 2.1 Data -- 2.2 Shift-Share Analysis and Cyclical Effects -- 2.3 Cohort-Based Model -- 2.4 Forecast and Simulations -- 3 Results -- 3.1 The Role of Aging and Cyclical Effects -- 3.2 Age and Cohort Effects in Labor Force Participation Rates -- 3.3 Illustrative Simulations -- 3.4 Robustness -- 4 Conclusions -- References -- A Country-Specific Estimates -- B Calculation of the Cyclical Effects -- List of Figures -- 1 Demographic Transition in AEs Compared to EMDEs -- 2 Changes in LFPR over 2008-16 -- 3 LFPR by Gender -- 4 Changes in LFPR by Gender Since 2008: The Role of Aging and Cyclical Effects -- 5 Age Effects -- 6 Cohort Effects -- 7 Trend Projection of LFPR -- 8 Changes in Trend LFPR Under Alternative Scenarios -- A.1 Age Effects by Country -- A.2 Cohort Effects by Country -- A.3 Actual and Trend LFPR by Country -- A.4 Trend Projections of LFPR by Country -- List of Tables -- B.1 Regressions of Detrended LFPR
Language
eng
Literary Form
non fiction
Physical Description
1 online resource (25 pages)
Specific Material Designation
remote
Form Of Item
online
Isbn
9781484358634

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