Employment Growth and Labor Force Participation: How Many Jobs are Enough?
FRB of Atlanta Working Paper No. 2004-25
24 Pages Posted: 4 Jan 2005
Date Written: October 2004
This paper demonstrates that, because of declining labor force participation rates, the usual estimates of job creation needed to keep unemployment in check are too high. It is estimated that only 98,000 jobs (rather than the usual goal of 150,000 jobs) need to be created per month to absorb the growing labor force. As the population ages, the labor force will grow even more slowly, and the number of jobs that need to be created will decline. This paper explores the potential implication of this decline in labor force growth on total output along with potential sources of replacement labor to fuel desired growth in the gross domestic product (GDP).
Keywords: job growth, labor force participation, unemployment
JEL Classification: J21, E24
Suggested Citation: Suggested Citation