A simple decomposition of Alaska's labor force participation rate

Abstract

In Alaska, similar to the rest of the country, the share of people working or seeking employment started declining in the early 2000's. The implications for lower labor force participation rates are numerous and have consequences on the tax base, government revenues, and economic growth. From 2000 to 2010, we find Alaska's labor force declined from 73.5 to 69.6% with more than 90% of the decline attributed to demographic shifts. From 2010 to 2018, the labor force participate rate went from 69.6 to 65% but the reasons for the decline were due to both behavioral adjustments (44.6%) and demographic shifts (55.3%). Lastly, we show that using the unemployment rate as a metric of the economy's health during times of significant labor force change can be misleading.