This is a substantially updated version of the earlier paper initially posted in 2019, which you can find below.
Trends in Labor Force Participation and Unemployment, 1976-2024
by Andreas Hornstein and Marianna Kudlyak, FRB San Francisco WP No. 2026-11
Download Technical Appendix, May 2026
Abstract: Using CPS microdata, 1976-2024, we estimate trend and cyclical components of unemployment and labor force participation for 44 age-gender-education groups. We fit a parsimonious state-space model in which each series is the sum of latent cohort and time-varying age effects and a latent cyclical factor shared across unemployment and participation, without imposing structural covariates. Aggregating group trends with observed population shares, we find that population aging and educational upgrading explain most long-run movements in aggregate trends, while cohort effects drive large gender differences in participation. Combining our estimates with demographic projections and an estimated cohort model of education shares, we forecast that over the next two decades, trend participation declines by about 1.5 pp and trend unemployment falls by about 0.4 pp, remaining historically low.
Aggregate Labor Force Participation and Unemployment and Demographic Trends
by Andreas Hornstein and Marianna Kudlyak, FRB San Francisco WP No. 2019-07, FRB Richmond WP No. 2019-08
Download LFP and Unemployment Trends and Projections, 1976-2028
Download Educational Shares by Age-Gender Groups, 1976-2028
Abstract: We estimate trends in the labor force participation (LFP) and unemployment rates for demographic groups differentiated by age, gender, and education, using a parsimonious statistical model of age, cohort and cycle effects. Based on the group trends, we construct trends for the aggregate LFP and unemployment rate. Important drivers of the aggregate LFP rate trend are demographic factors, with increasing educational attainment being important throughout the sample and ageing of the population becoming more important since 2000, and changes of groups' trend LFP rates, e.g. for women prior to 2000. The aggregate unemployment rate trend on the other hand is almost exclusively driven by demographic factors, with about equal contributions from an older and more educated population. Extrapolating the estimated trends using Census Bureau population forecasts and our own forecasts for educational shares, we project that over the next 10 years the trend LFP rate will decline to 61.1% from its 2018 value of 62.7%, and the trend unemployment rate will decline to 4.3% from its 2018 value of 4.7%.