On the sidelines: Labor force participation of prime age men
Labor force participation rates for men have been declining in the United States for more than a century. Beginning in the late 1940s BLS data reveal that men's labor force participation fell from 90 percent in 1949 to 70 percent in 2012. This trend occurred concurrently as women's labor force participation was on the rise from approximately 35 percent in 1948 to a peak of almost 77 percent in 1999.
The objectives of this paper are twofold. I first describe changes in men’s labor force participation focusing on human capital, industrial, and demographic variables. I then estimate the labor force participation of prime age males over selected years and decompose these into changes in characteristics and changes in behavior.
Data and Methods
I utilize family data files from the Panel Study of Income Dynamics for the years 1990 - 2010. The sample used here consists of “prime age” men, that is, men between the ages of 25 and 54 years. I hypothesize that men's falling labor force participation rates can be explained by their failure to invest in human capital. Employing a probit model, I decompose the effects of changes in characteristics and changes in behaviors to analyze their relative importance in explaining men's labor force participation. For selected years labor force participation is estimated using a common set of parameter coefficients and with a common set of human capital characteristics.
Expected Results
Falling labor force participation of men has many and diverse causes, including social, technological, as well as economic. Most notably I expect results to demonstrate that the exit of prime age men is due to their deficiency in human capital.
Discussion
The failure of prime age men to invest in human capital represents a paradox such that men have not responded to market signals pointing to human capital investment in order to meet the demands of an increasingly dynamic and competitive labor market. Empirical analysis can shed light on the role human capital investment can play in understanding the withdrawal of prime age men from the labor force and provide a basis for policy recommendations.