Business cycles are about unemployment; not about changes in the participation rate.
 |
| (c) Roger E. A. Farmer March 2015 |
See my twitter posts today on this topic.
If people choose to look for a job; that's their business. If people can't find a job; that's our collective business as a society.
Participation is a voluntary choice. Unemployment is not.
The idea that unemployment is voluntary is classical nonsense.
Anybody want to explain to me why they think labor force participation is a cyclical phenomenon?
Participation is not cyclical! Unemployment is!
The secular trend in participation dwarfs the cyclical movement. That's an important fact!Follow me on twitter @farmerrf
In principle discouraged workers could be cyclical, and there can be structural changes in almost anything, including unemployment (look at cross-country variation), but it's still surprising how little of either shows up in the data.
ReplyDelete