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

See all articles by John Robertson

John Robertson

Federal Reserve Bank of Atlanta

Julie L. Hotchkiss

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

Date Written: August 2005

Abstract

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

Robertson, John C. and Hotchkiss, Julie L., Asymmetric Labor Force Participation Decisions Over the Business Cycle: Evidence from U.S. Microdata (August 2005). FRB of Atlanta Working Paper No. 2006-8. Available at SSRN: https://ssrn.com/abstract=922378 or http://dx.doi.org/10.2139/ssrn.922378

John C. Robertson (Contact Author)

Federal Reserve Bank of Atlanta ( email )

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Julie L. Hotchkiss

Federal Reserve Bank of Atlanta ( email )

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

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