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Differences in labour force participation between birth cohorts and the implications for long-term projections
The persistent rise in aggregate labour force participation rates in Australia up until around 2010 suggests that later birth cohorts are more likely to participate than earlier ones. However, changes in aggregate participation rates are often analysed by looking separately at developments for different age groups. For example, Treasury produces medium- to long-term participation rate projections for different age groups for the Commonwealth Budget and the Intergenerational Report. These projections are then aggregated using projections of the structure of the population. However, this approach does not fully utilise the information in the historical data, because it does not account for a cohort’s participation rate at previous ages when projecting the cohort’s future behaviour. In light of this limitation, this seminar presents work-in-progress results from a project aimed at understanding what effect differences between birth cohorts and demographic changes have had on participation rates. In particular, the seminar will focus on differences in the propensity to participate between birth cohorts: how to identify these differences, how they contribute to changes in participation rates, and the implications for long-term participation rate projections.
Linus works in the Macroeconomic Modelling and Policy Division (MMPD) within the Department of Treasury. MMPD provides advice to the Treasurer on a range of macroeconomic issues which are likely to influence Australia’s medium to long-term economic performance and living standards.