Decomposing Changes in the Total Labor Force Participation Rate

This paper presents a simple methodology for decomposing changes in the total labor force participation rate (LFPR) over time into demographic group changes in labor force participation behavior and in population share. While the declining rates of labor force participation among young people and working age women account for a sizable portion of the decline in the overall LFPR since 2000, the declining population share of working age men and women were far more important. Knowing whether changes in the rate of labor force participation is primarily driven by changes in behavior (demographic group-specific change in LFPR), which is not typically predictable, or by changes in population shares, which is more predictable, will contribute to our forward looking anticipation of available labor resources