BPEA | Fall 2012

The Reversal of the Employment-Population Ratio in the 2000s: Facts and Explanations

Robert A. Moffitt
Robert A. Moffitt Johns Hopkins University
Discussants: Alexandre Mas and
Alexandre Mas Professor of Economics and Public Affairs - Princeton University
Steven J. Davis
Steven Davis Headshot
Steven J. Davis William H. Abbott Professor of International Business and Economics - The University of Chicago Booth School of Business

Fall 2012

The decline in the employment-population ratios for men and
women over 2000–07, just before the Great Recession, represents a historic
turnaround in U.S. employment trends. The decline is disproportionately concentrated
among the less educated and younger groups within the male and
the female populations and, for women, especially among unmarried women
without children. About half of the decline among men can be explained by
declines in wage rates and by changes in nonlabor income and family structure,
but the decline among women is more difficult to explain and requires distinguishing
between married and unmarried women and between those with and
without children, as these subgroups have experienced quite different wage
and employment trends. Neither changes in taxes nor changes in government
transfers appear likely to explain the employment declines, with the possible
exception of the Supplemental Nutrition Assistance Program. Other influences
such as the minimum wage and health factors do not appear to play a role, but
increases in incarceration may have contributed to the decline among men.