August 30, 2012

Teenage Labor Participation versus Unemployment and Inflation

I recently took a look at the labor force participation rate for teenagers age 16 to 19 years old versus the minimum wage rate.   I found no correlation between the two.    Today I'll look at the teen labor participation rate versus unemployment and inflation.  

Unemployment is from historical A1 tables at the BLS.   Inflation index is the CPI from the BLS.   For inflation I took the annual sum for each year.

First here is the teenager labor participation rate versus unemployment :

I do think there is some correlation here.   Just looking at the chart it does seem the labor participation rate and the unemployment generally move in opposite directions to some degree.    Lets look at the year to year % change for each and plot those together to see what that looks like :

I think that makes it a lot clearer.   For the most part the two values are usually moving in opposite directions.   When employment goes up we get more teens dropping out of the labor force and when employment goes down we see more teens in the labor force.      That generally makes sense.    How easy it is to get a job is going to impact the % of teenagers who try to get jobs.   If the economy really sucks then more teens will sit at home and not even try but if there are 'help wanted' signs all over then more teens are likely to end up working.

Next lets look at the teen labor participation versus inflation:

I don't see any real solid relationship between inflation and teen labor participation.  But high inflation periods are not common.  

Bottom Line :  To me it does seem there is a pretty strong correlation between the unemployment rate and the teen labor participation rate.   On the other hand I don't see any particular relationship between inflation and teen labor participation.

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