The pig in the python: US decennial labor flows and economic opportunity, 1910-2040

Area of Science:

• Demography
• Labor Economics
• Sociology

Background:

• The relative cohort size hypothesis posits that a generation's economic and social outcomes are shaped by its size relative to preceding and succeeding generations.
• Richard Easterlin's 1960s theory linked cohort size to wages, employment, marriage, and fertility, performing well from 1940-1980 but less so subsequently.

Purpose of the Study:

• To re-evaluate the impact of demographic factors on labor market competition.
• To develop a more nuanced understanding beyond the original relative cohort size hypothesis.
• To project future labor market conditions.

Main Methods:

• Analysis of decennial labor-force flows from 1910 to 2040.
• Development of an index of employment competition.
• Incorporation of factors like retirement, female labor-force participation, and immigration.

Main Results:

• Labor market competition trends correlate with young worker wage trends since 1940.
• Calculated labor-force flows provide a dynamic measure of worker competition.
• Projections indicate a substantial decrease in the supply of new workers by 2040.

Conclusions:

• Demographic shifts significantly influence labor market dynamics and worker competition.
• The labor market is undergoing a major transformation, with a projected scarcity of new workers.
• Future economic and social prospects may be redefined by these demographic trends.