Labour Force Participation in the Euro Area - A Cohort Based Analysis

55 Pages Posted: 7 May 2009

See all articles by Almut Balleer

Almut Balleer

RWTH Aachen University

Jarkko Turunen

International Monetary Fund

Ramon Gomez Salvador

European Central Bank (ECB)

Date Written: May 7, 2009

Abstract

We use a cohort based model to analyze determinants of labour force participation for disaggregated groups of workers in the euro area and the five largest euro area countries. The model captures age and cohort effects as indicators of (unobserved) determinants of participation behaviour. We use these effects and observed determinants to construct trends and projections of labour supply. Our results suggest that age and cohort effects can account for a substantial part of the recent increase in participation. Cohort effects are particularly relevant for women with those born in the late 1960s and early 1970s more likely to participate over the life-cycle. There is substantial variation in the estimated age and cohort effects across countries. Looking forward, positive cohort effects for women are not large enough to compensate for the downward impact of population aging on participation rates in the euro area.

Keywords: labour force participation, cohort analysis, labour market institutions

JEL Classification: J11, J21

Suggested Citation

Balleer, Almut and Turunen, Jarkko and Salvador, Ramon Gomez, Labour Force Participation in the Euro Area - A Cohort Based Analysis (May 7, 2009). ECB Working Paper No. 1049, Available at SSRN: https://ssrn.com/abstract=1393645 or http://dx.doi.org/10.2139/ssrn.1393645

Almut Balleer

RWTH Aachen University ( email )

Templergraben 55
52056 Aachen, 52056
Germany

Jarkko Turunen (Contact Author)

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Ramon Gomez Salvador

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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