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| Graph #1 |
Yeah, okay. I'm not entirely comfortable with the standard explanations. (If the baby boom began in 1946 and people retire at 65, the downtrend should not begin until around 2011 if the baby boom explains it.) But I'm almost never entirely comfortable with standard explanations, at least until I work them out for myself. But I don't want to talk about that.
I want to talk about this:
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| Graph #2 |
The massive increase shown on Graph #1 begins around December 1964 and ends around July 1997. The increase was from about 58.5% to about 67%, for a total of 8.5 percentage points over a 31½-year period. That's a little over one quarter of one percent per year. Say instead that it ends in 1990, and it still only comes to one third of one percent each year.
The increase in 1955 was two percentage points in one year. At that rate, you could do the whole 1964-1997 increase in just four years. The rapid growth of the Participation Rate occurred in 1955. It just didn't last long.
But that makes it all the more interesting. What was the reason for that sudden, sharp increase, when the trend was otherwise down from the early 1950s to the early 1960s, down except for 1955.
The reason? I don't know. I couldn't find anything on the internet except baby boom and women in the workforce.
So let me ask a different question: Does the 1955 increase in the Civilian Labor Force Participation Rate have anything to do with the inflation of 1955-1957? I recall what James Forder wrote:
The question [Samuelson and Solow] were addressing was that of the explanation of the inflation of the 1950s – particularly the period 1955-57 – and the implications it had for macroeconomics. Mild though that was later to seem, this 'creeping inflation' as it was called was, at the time, a source of much anxiety.
Maybe the sudden jump in labor force participation caused the inflation?
4 comments:
The civilian labor force in December 1954 consisted of 63,312,000 people. In January 1956, 66,419,000 people. There was an increase of 3,107,000 people in the labor force.
In 1954 the total number of U.S. military personnel was 3,302,104. In 1955, 2,935,107. There was a decrease of 336,997 people. This is equal to about 12% of the increase of the 1955 increase in the labor force.
What accounts for the other 88 percent?
US Population:
164,349,000 in December 1954.
167,513,000 in January 1956.
There was a U.S. population increase of 3,164,000 people during that time.
The increase in the labor force was 3,107,000. Maybe everyone who was born in 1955 immediately entered the labor force?
At Asymptosis, 7 Sept 2013: Did the Baby Boom Labor Force Surge Cause The Great Inflation?:
"Steve Randy Waldman delivers another Aha! post (and a followup reply to Scott Sumner) pointing out a huge driver of the 1970s Great Inflation — the rise in the labor force".
If the Great Inflation was caused by a shock to labor force growth, maybe the 1955-57 inflation was also caused by a shock to labor force growth.
From Mish: "In the fiscal year ending July 1, 2016, U.S. population increased by 0.7%, the smallest increase on record since The Great Depression years of 1936-1937."
Those born in 1936-37 would have been turning 18 or 19 in 1955, and many of them would have been entering the workforce. This implies "the smallest increase on record" for Labor Force growth, or something similar.
PRB (the Population Reference Bureau) in The Decline in U.S. Fertility shows a graph that puts the fertility rate at a low during the Great Depression. This agrees with Mish's observation.
They say:
"In the United States and other developed countries, fertility tends to drop during periods of economic decline. U.S. fertility rates fell to low levels during the Great Depression (1930s), around the time of the 1970s “oil shock,” and since the onset of the recent recession in 2007".
Unrelated to the 1955 question, their graph shows us population IN DECLINE thru most of the 1920s and again since around 1960. The population decline PRECEDES the Great Depression and precedes the oil crisis of the 1970s, and suggests that the "periods of economic decline" did as well. I think that's a good evaluation of the 1920s, but not so much for the 1960s.
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