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Disappearing Routine Occupations and Declining Prime-Age Labor Force Participation

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  • Didem Tuzemen

Abstract

I study the effect of disappearing routine occupations on the decline in the labor force participation rate of prime-age individuals since the 1990s. I use multiple data sources and empirical models to study this relationship. First, I exploit state-level variation and show that the long-term trends of declining routine employment and prime-age labor force participation are highly correlated. Second, I narrow the geographic unit to local labor markets and quantify the causal effect of declining routine employment on the labor market outcomes of prime-age individuals. My results imply that the decline in routine employment was an important contributor to the declines in the labor force participation rate and employment-to-population ratio since the 1990s, especially for prime-age individuals without a bachelor's degree. Additionally, I show that the decline in routine employment was not limited to prime-age men in the manufacturing industries, but was observed across most major industries and affected women as well. More strikingly, disappearing routine employment had a larger negative effect on the labor force participation rate of prime-age women without a bachelor's degree than their male counterparts.

Suggested Citation

  • Didem Tuzemen, 2019. "Disappearing Routine Occupations and Declining Prime-Age Labor Force Participation," Research Working Paper RWP 19-3, Federal Reserve Bank of Kansas City.
    • Handle: RePEc:fip:fedkrw:rwp19-03
    DOI: 10.18651/RWP2019-03
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    More about this item

    Keywords

    Job Polarization; Labor Force Participation; Prime-age Individuals; Skills;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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