Discouraged vs. added workers: Variation by gender, age, and marital status

Abstract

This paper analyzes the relationship between aggregate unemployment and the labor force participation of males and females of differing ages and marital circumstances. According to the discouraged-worker effect, a higher unemployment rate causes some workers to leave the labor force leading to a reduction in both the labor-force participation rate and the unemployment rate. To shed light on this statistical incongruity, a unique data set consisting of monthly observations from the Current Population Survey is used to extract the labor force participation rates of males and females of three different age categories and three different marital classifications. Impulse functions from vector error-correction models indicate that discouraged workers are more likely though not exclusively to consist of married males and females between 50 and 65 years of age. No statistically significant evidence of a net added-worker effect is found among married females or males in any age group.

Keywords:

• Discouraged workers
• Added workers
• Gender
• Age
• Marital status

Notes

1 See Current Population Surveys (1976–2012).

2 See Bureau of Labor Statistics (2013).

3 See Borjas (2013, pp. 24–27).

4 Because of the differences in the two tests, an unrestricted VAR model is estimated, one without the assumption of a cointegrating vector. The impulse response functions from this model are similar to the ones produced by the VECM.

5 See for example Wilmoth and Koso (2002).