Does weak labor market exposure permanently reduce male workforce participation?
Core argument: Male labor force participation decline correlates strongly with cohort-level lifetime labor market experiences, driving persistent participation gaps across generations independent.
We propose a new channel contributing to the long-run decline in [male labor force participation] (MLFP) in the United States: changes in American men’s lifetime experiences of the aggregate male labor market have shaped their beliefs about the returns to participation, influencing labor supply decisions in ways that persist even in the face of current market conditions. MLFP and national lifetime male labor market experiences, holding contemporaneous conditions fixed, are highly correlated over time (Figure 1, Panel A). Second, the decline in MLFP is largely driven by cohort-level differences: recent cohorts participate at lower rates than previous generations at every age (Figure 1, Panel B). These patterns suggest that men’s labor market participation is the history, embedded in each cohort’s memory, of the labor markets experienced by the men around them. The effects on MLFP are stronger for experiences of same-race male labor markets, demonstrating the central role of reference-group identity, and are driven by conditions experienced during men’s formative childhood years not explained by educational attainment of subjects or their fathers. Finally, we show that lifetime male labor market experiences are correlated with direct measures of men’s personal wage and employment expectations, but not their expectations for the macroeconomy as a whole.