Asymmetric Labor Force Participation Decisions Over the Business Cycle: Evidence from U.S. Microdata
FRB of Atlanta Working Paper No. 2006-8
33 Pages Posted: 8 Aug 2006
Date Written: August 2005
The purpose of this paper is to explore the microfoundations of the observed asymmetric movement in aggregate unemployment rates. Using U.S. data, we find that individual labor force participation responds asymmetrically to changes in local labor market conditions, consistent with the pattern of movements in the aggregate unemployment rate. Differences in the asymmetry and sensitivity of labor force participation decisions are found across gender, age, and education groups, and these differences are used to anticipate changes in the aggregate movements as population characteristics change over time.
Keywords: asymmetric labor force participation decision, unemployment rate, business cycle, gender, education, age
JEL Classification: J21, J22, E24, E32
Suggested Citation: Suggested Citation