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posted on 15 November 2015

Why Are Women Leaving The Labor Force?

from the Richmond Fed

-- this post authored by Maria E. Canon, Helen Fessenden, and Marianna Kudlyak

The female labor force participation (LFP) rate has dropped steadily since 2000, especially among single women. At the same time, the percentage of single women has grown as a share of the female population, a trend that has increased the impact of the single women's LFP rate on the aggregate women's LFP rate. An analysis of data from the Current Population Survey shows that a growing percentage of single women who are not in the labor force are going to school. Meanwhile, an increasing share of married women list retirement as the reason for no longer participating in the labor force.

A growing debate among economists concerns the causes and consequences of the drop in labor force participation (LFP) rate in the United States. In contrast to the unemployment rate, which shows the percentage of people in the labor force who are actively looking for work and cannot find it, the LFP rate measures what percentage of people age 16 and above do not participate in the labor force - for example, those who head into retirement or accept disability benefits, those who are too discouraged to search for work, or those who are not a part of the labor force for a variety of other reasons.

In October 2015, the unemployment rate was 5 percent - about where it was before the recession of 2007 - 09. But the LFP rate in the United States has continued to decline to around 62 percent, about 4 percentage points lower than it was before the recession. Citing this drop, some economists argue that there remains significant capacity for the labor market to tighten before wage growth picks up again. Other economists counter that much of the decline has to do with demographic forces and that many of these former workers are unlikely to return to the labor force. The rising number of retired workers in the Baby Boom generation, for example, is often cited as a driver for falling labor force participation.

[click on image below to continue reading]

Source: https://www.richmondfed.org/-/media/richmondfedorg/publications/research /economic_brief/2015 /pdf/eb_15-11.pdf

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