Technological Unemployment and Work

The state of technology and the unemployment rate look nothing like each other.  What about the state of technology and the labor force participation rate (LFP)?

Well, LFP doesn’t have massive spikes like the unemployment rate.  Since the state of technology doesn’t have massive spikes either, that eliminates one big discrepancy.

Otherwise, however, LFP and technology have almost nothing in common.  Technological progress is nonstop, but LFP rose for five decades, then started falling.

Disaggregating a bit:

1. LFP was roughly flat from 1948-1965, a period of legendary technological progress.

2. LFP rose non-stop from 1965-1999, a period of noted technological progress.

3. LFP fell almost non-stop from 2000-2015, another period of noted technological progress.

4. LFP has been flat ever since, as progress from earlier in the 21st-century continues unabated.

If technology doesn’t explain these ups, downs, and lulls, what does?  I see every reason to accept the orthodox view that demographics are the most important factor, by far.  The main reason for the rise: Far more women now want to work outside the home than in 1948, so far more do.  The main reason for the fall: aging.  Why the hump?  There’s an upper bound on female LFP, because there’s a solid core of women who want to stay home and take care of their kids.  We hit that bound a couple decades ago, so the effects of aging finally became obvious.

Yes, there’s also been a decline in prime-age male participation.  You could blame technology, but it makes a lot more sense to blame the mating market.  As female income rises, women understandably place less weight on men’s financial success.  As a result, attractive men no longer need a job to date, and unattractive men need more than a low-status job to date.  Culture amplifies these effect: The fewer men work, the lower the shame of idleness – and the lower the shame of dating an idle man.

Is the mating market story speculative?  Perhaps.  But unlike the technological story, at least it doesn’t directly contradict the facts.

The post appeared first on Econlib.