A Closer Look at Nonparticipants During and After the Great Recession

FRB Atlanta Working Paper Series No. 2012-10

35 Pages Posted: 9 Aug 2012

See all articles by Julie L. Hotchkiss

Julie L. Hotchkiss

Federal Reserve Bank of Atlanta; Georgia State University - Department of Economics

M. Melinda Pitts

Federal Reserve Bank of Atlanta

Fernando Rios‐Avila

Bard College - The Levy Economics Institute

Date Written: August 2012

Abstract

This paper uses matched individual-level data from the Current Population Survey to determine that around the 2008 recession, there was a significant upward shift in trend of the share of labor force leavers giving "Schooling" and "Other" as the reason for absence from the labor market. This trend shift is observed primarily among workers between the ages of 25 and 54 and is widespread across all educational groups with at least a high school degree. In addition, the upward shift in the trend of the schooling reason share occurred among workers previously employed in occupations and industries with varying degrees of job losses during the recession. This shift suggests it was a widespread phenomenon and not isolated among sectors or occupations that suffered the most during the recession. The implication is that the upward shift in the schooling reason share has more likely been a response to lower opportunity costs of schooling during economic downturns rather than the result of workers trying to overcome skill mismatch in the labor market. In addition, since transition rates to the labor force are highest among those giving "Schooling" and "Other" as reasons for absence, the decline in labor force participation since 2008 is likely more transitory than permanent.

Keywords: nonparticipation, labor force participation, labor market transition, great recession

JEL Classification: J21, J22

Suggested Citation

Hotchkiss, Julie L. and Pitts, M. Melinda and Rios‐Avila, Fernando, A Closer Look at Nonparticipants During and After the Great Recession (August 2012). FRB Atlanta Working Paper Series No. 2012-10. Available at SSRN: https://ssrn.com/abstract=2126870 or http://dx.doi.org/10.2139/ssrn.2126870

Julie L. Hotchkiss (Contact Author)

Federal Reserve Bank of Atlanta ( email )

Research Department
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Georgia State University - Department of Economics ( email )

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M. Melinda Pitts

Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street, NE
Atlanta, GA 30309-4470
United States
404-498-7009 (Phone)
404-498-8956 (Fax)

Fernando Rios‐Avila

Bard College - The Levy Economics Institute ( email )

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States

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