Just a comment to Paul Krugman’s Slackers At The Fed post.
Labor Participation (LP) among women has been increasing, so more house-mom’s can’t explain it. The lower 80% aren’t getting any wealthier, so should need to work at similar rates as in the past.
But there are three plausible candidate solutions over this time period. Dave Ramsey anti-debt-ism has the effect of encouraging lower-80%’ers to revert to a one-parent-working model as they get their debt under control. But I expect this would be a small effect (LPR reductions of 0.1%-0.5%?).
Two, all the talk of the importance of education (eg The World Is Flat) encourages people to stay in school longer. Direct measures of longer schooling and inflation in education prices suggests this could be a large – but temporary – pool depressing LPR. Retraining (eg sales people training into medical professions) also fit into this category. This could be a large portion of the decline, and it doesn’t necessarily indicate a good thing. People who have to spend more time getting educated have lower lifetime earnings than if that education could be compressed. Are our current Nursing & MBA programs 100% efficient? Probably not.
Finally, the children of upper-10%-ers might be “working” less in an economy with fewer (good) jobs.
Maybe the important question is simply, “If you could make good money, would you work?” The 2000 & 2007 peaks say, “Yes,” and bolster the case for stimulating the economy.