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What drives labor force participation rate variability? The case of West Virginia

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  • Beverly, Josh
  • Stewart, Shamar L.
  • Neill, Clinton L.

Abstract

This study examines the dynamics of labor force participation rates across counties in West Virginia to better understand local labor market integration and the factors influencing fluctuations in participation. Drawing on county-level data from January 1990 to July 2020, the research employs a dynamic factor model to decompose labor force participation rates into latent factors at the state, metropolitan/non-metropolitan, and county levels. The findings reveal a general lack of labor market integration across West Virginia, highlighting potential opportunities for growth through enhanced integration. Further analysis using panel data models identifies key determinants of labor force participation, including personal income, education, infrastructure, and the prominence of industries such as agriculture and natural gas. The results underscore the necessity for targeted county-level policies to bolster employment and promote economic expansion within the state.

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  • Beverly, Josh & Stewart, Shamar L. & Neill, Clinton L., 2024. "What drives labor force participation rate variability? The case of West Virginia," Economic Modelling, Elsevier, vol. 140(C).
    • Handle: RePEc:eee:ecmode:v:140:y:2024:i:c:s0264999324002189
    DOI: 10.1016/j.econmod.2024.106861
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    More about this item

    Keywords

    Labor force participation; Dynamic factor model; Metro/non-metro; Bayesian analysis; Time series analysis;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics

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