The UK Labour Force Participation Rate: Business Cycle and Trend Influences

Bank of England Working Paper No. 228

37 Pages Posted: 4 Jan 2005

See all articles by Mark Schweitzer

Mark Schweitzer

Federal Reserve Banks - Federal Reserve Bank of Cleveland

David Tinsley

Oxford Economic Forecasting

Date Written: September 2004

Abstract

In this paper the extent to which recent patterns in UK labour force participation have been influenced by trend and business cycle factors is investigated. A modelling strategy is proposed that pools the available micro and aggregate-level data, to produce a mutually consistent model of the trend and cyclical components of participation. A significant procyclical pattern is established, but some distinct trend influences on the participation rate are also identified. The approach allows for the construction of forecasts, which would be a useful input into the sort of macroeconometric models used by policymakers. The model outperforms some conventional macroeconometric forecasts in out-of-sample forecast tests.

Keywords: Participation, business cycles, micro trends

JEL Classification: E32, E24, E27

Suggested Citation

Schweitzer, Mark and Tinsley, David, The UK Labour Force Participation Rate: Business Cycle and Trend Influences (September 2004). Bank of England Working Paper No. 228, Available at SSRN: https://ssrn.com/abstract=641284 or http://dx.doi.org/10.2139/ssrn.641284

Mark Schweitzer

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

David Tinsley (Contact Author)

Oxford Economic Forecasting ( email )

Abbey House, 121 St Aldates
Oxford OX1 1HB
United Kingdom

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