## Recent U.S. Labor Force Dynamics: Reversible or not?

_IMF Working Papers, April 2, 2015_

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## Bibliographic details
- Authors: Ravi Balakrishnan, Mai Dao, Juan Sole, Jeremy Zook
- Published: April 2, 2015
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484315620.001

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### Overview
- The U.S. labor force participation rate (LFPR) fell dramatically following the Great Recession and has yet to start recovering.
- Central question: how much of the post-2007 decline in LFPR is reversible.

### Key findings
- While around ¼–? of the post-2007 decline is reversible, the LFPR will continue to decline given population aging.
- The paper’s measure of the “employment gap” suggests that labor market slack remains and will only decline gradually.
- Given continued downward pressure on the LFPR, labor supply measures will be an essential component of the strategy to boost potential growth.
- Stimulatory macroeconomic and labor supply policies should help reduce the scope for further hysteresis effects (e.g., loss of skills, discouragement).

### Employment gap and labor market slack
- The employment gap measure indicates persistent slack in labor markets.
- Slower decline of the employment gap implies a still important role for stimulative macro-economic policies to help reach full employment.

### Policy implications and recommendations
- Use stimulative macroeconomic policies to help reduce labor market slack and move toward full employment.
- Implement labor supply measures to counteract downward pressure on the LFPR and support potential growth.
- Apply both macroeconomic stimulus and labor supply policies to limit hysteresis effects such as loss of skills and worker discouragement.

### Authors and publication metadata (as cited in the source)
- By Ravi Balakrishnan, Mai Dao, Juan Sole, Jeremy Zook
- April 2, 2015
- Pages: 29
- Series: Working Paper No. 2015/076
- Issue: 076
- Volume: 2015
- DOI: https://doi.org/10.5089/9781484315620.001
- ISBN: 9781484315620
- ISSN: 1018-5941

*Source: IMF Working Papers — "Recent U.S. Labor Force Dynamics: Reversible or not?"*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/recent-u-s-42832_