14 May 2025

Male Labor Force Participation Increases With Higher Wages

Not an unreasonable hypothesis, that explains lower labor force participation in red states. But this may be actually capturing, indirectly, the likelihood that a man is a blue collar v. a white collar worker.
Male labor force participation (MLFP) has declined sharply over the past 50 years in the United States. 
We show that a key driver of this decline is changes in mens' beliefs about the returns to work, shaped by their lifetime experiences of aggregate male wages. Using PSID data tracking individual labor histories linked to state-level real male wage time series, we find that prime-age MLFP increases with the average male wage in a man's state of birth over his lifetime, even after controlling for current labor market conditions and a host of fixed effects and covariates. 
A one standard deviation increase in the average experienced aggregate lifetime hourly wage-corresponding to $0.33 and comparable to the difference in 2000 between being born in 1970 in Louisiana and Texas-raises the probability of labor force participation by 10 percentage points. These effects persist for men who migrate and are stronger when restricting to same race wages. 
Our findings suggest that lifetime wage experiences shape long-term beliefs about work, generating lasting spillovers from labor demand to labor supply.
Levin, Remy and Vidart, Daniela, "'Nobody Wants to Work Anymore': Lifetime Wage Experiences and the Decline of Male LFP in the United States" (March 18, 2025). Available at SSRN: https://ssrn.com/abstract=5216777 or http://dx.doi.org/10.2139/ssrn.5216777

No comments: