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Marketplace of Ideas

Looking for some stories from the week’s economic news to sink your teeth into? Read on.

  • Marriage on the declineChildren raised by married parents typically have better social and economic outcomes, but why? A new study from Brookings looks at whether the “marriage gap” is a function of parenting or income. In short, the answer is both. But there is nothing intrinsic to marriage that promises better outcomes for children, the study notes. The Wonkblog points out that people who marry tend to be better educated and have higher incomes from the get go. While higher incomes provide more resources for parenting, a two-parent household also provides more time for parenting. Does this mean policymakers should encourage marriage to give a boost to U.S. children, who lag behind other developed nations in educational attainment? That may be futile—the Brookings study notes that marriage rates are “immune” to the efforts of policymakers. Indeed, Bloomberg reported this week that more than half of the adult U.S. population is single. That number looks set to rise, as Pew has shown that marriage rates are declining for each new generation, with Millennials tying the knot at just a 26 percent rate.

  • Where have all the workers gone? While the unemployment rate is still above pre-recession levels, some policymakers are already fretting over a potential labor shortage in the U.S. That’s because the labor force participation rate has been on a steady downward march since peaking at 67.3 percent in early 2000, with the exception of a brief bump up during the go-go years just before the 2007-09 recession. At last report it stood at just 62.8 percent. That means that while the U.S. civilian population has grown by 36.5 million people since 2000, the labor force has grown by just 13.7 million. What’s driving the decline in participation? Some have speculated that lower participation rates have been due to limited job prospects in a recession-hobbled economy, with discouraged workers dropping out of the labor force. Yet despite continued strong gains in jobs over the last two years, there has been no bounce-back in the participation rate. A new study by Fed analysts suggests that the vast majority of the decline is due to demographic factors—in particular, the demographic bulge known as the baby boom generation: As workers age, they become less likely to participate in the labor force, regardless of the going wage rate. What does that mean for the economy? Slower labor force growth tends to correspond to a lower growth potential for GDP.
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