This article by Sara Murray, posted online from the August 5, 2011 Wall Street Journal, discusses data that indicates that the labor force participation ratio has dropped to a new low since the beginning of records in the early 1980s. The article does not just state the obvious, in that workers have become discouraged and have given up on finding work, but it goes further. It says that those workers who have been out of the job market for a long period often have a reduced life span and develop anxiety and depression. It is interesting to see this long run effect for those out of jobs. The article also states that as participation decreases the economy looses productivity. One can then use the concept of factor productivity discussed in class to make assumptions about how this is affecting those who are in the labor force. Assuming a decrease in the labor force participation rate means less workers. Holding output (Q) constant, the only way to keep total factor productivity (A) constant would be to increase the amount of hours worked by each of the existing workers or to increase capital investments. During the recession I assume it is difficult to find capital investments and therefore hypothesize that each work will have to work harder and longer. Therefore with the information given the decreasing labor force participation ratio would not only but a mental strain on those out of work, but also on existing worker. I found it extremely interesting to read an article and be able to formulate my own hypothesis based on what was taught in class.
If your interested in reading this brief article here is the web address: http://blogs.wsj.com/economics/2011/08/05/labor-force-participation-hits-new-low/
