The Labor Force Participation Rate: A Rexamination Of The Determinants Of Its Decline

The U.S. Labor Force Participation Rate (LFPR) is defined as the number of people in the labor force as a percentage of the civilian noninstitutional population 16 years and over.  In a paper published in November, 2013, we examined the determinants of the decline in the LFPR from a 1998 peak of 67.2% to then, 63.3%.  Consensus of a number of economic studies at that time was that the primary determinant of the decline was cyclical and that an improving economy would stop, if not reverse, the downward trend. Since that time the unemployment rate has declined from 7.2% to 5.3%.  However, the LFPR has continued its decline to 62.6%.  Structural issues in the economy would appear to have far greater effect on LFPR decline than previously believed. In this paper we examine the following classes of structural determinants and their effects on LFPR: demographics, including not only the prime working cohort of ages 25 to 54, but also those of retirement age; the impact of a welfare system that appropriately provides a critical safety net, but one that reduces incentive to work through disability payments, extended unemployment benefits, and other subsidies;  education for both those of a higher level of attainment, as well as an underclass that no longer receives training by business, but must rely on both public and private vocational education; and finally the consequences of globalization on the economy, including the virtual disappearance of semi-skilled industries in the United States that heretofore have provided jobs for high school graduates

The Labor Force Participation Rate: An Examination Of The Determinants Of Its Recent Precipitous Decline

The Labor Force Participation Rate (LFPR) is defined as those Americans in the labor force, i.e. above the age of sixteen, below retirement age, who are either actively employed or actively seeking employment.  From 1950 until 1998 it rose from 59.2% to 67.2%.  Given the near doubling of the U.S. population, its impact on our economy was enormous.  However, since 1998 the LFPR has declined steadily to 63.3%.  Parallel to this decline, we have seen a polarization of both wealth and income in the U.S.  Many economists have examined both trends – the decline of LFPR and inequality – and have put forth a variety of determinants.  These include technology and globalization – a decline or “hollowing out” of the middle class, if you will.  Also included are the demographics of an ageing society, and the increased racial and gender participation, but also a workforce that has become only marginally prepared by today’s educational institutions.  Another class of determinants is the welfare “safety net” at both the Federal and state levels, including extended unemployment benefits, disability payments and other subsidies.  The authors examine each class of determinants, including whether their aspects are cyclical, structural or even part of an ominous trend for our economy

Casino Stocks and Katrina: An Example of Market Over-Reaction?

How efficient was the market in anticipating the impact of Hurricane Katrina on the Gulf coast casino industry? This study uses the event study methodology to investigate the stock market’s reaction affecting equity prices of small casino companies with operations on the Gulf Coast centered on Biloxi, Mississippi. Cumulative Abnormal Returns (CARs) for 1 day, 3 day, and 6 day event windows are examined.. As such the impact of Katrina on stock prices of casino firms in the Gulf Coast is better understood