Krugman: Three Charts on Secular Stagnation

[ProSense]

12. Participation Rate: Trends and Cohorts

Participation Rate: Trends and Cohorts

by Bill McBride

A frequent question is: "I've heard the participation rate for older workers is increasing, yet you say one of the reasons the overall participation rate has fallen is because people are retiring. Is this a contradiction?"

Answer: This isn't a contradiction. When we talk about an increasing participation rate for older workers, we are referring to people in a certain age group. As an example, for people in the "60 to 64" age group, the participation rate has increased over the last ten years from 51.1% in April 2004 to 55.7% in April 2014 (see table at bottom for changes in all 5 year age groups over the last 10 years).

However, when we talk about the overall participation rate, we also need to know how many people are in a particular age group at a given time. As an example, currently there is a large cohort that has recently moved into the "60 to 69" age group. To calculate the overall participation rate we need to multiple the participation rate for each age group by the number of people in the age group.



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In April 2004, the two largest groups were in the "40 to 44" and "45 to 49" age groups. These people are now the 50 to 59 age group.

In April 2004, there were also a large number of people in the 50 to 59 age group. These people are now 60 to 69.

- more -

http://www.calculatedriskblog.com/2014/05/participation-rate-trends-and-cohorts.html

At the link, there is a detailed chart comparing the April 2004 to the April 2014 population, participation rate and labor force of each age group.