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This assumption is not directly testable, but the approach is potentially useful as an alternative to other methods.We use state-level payroll employment growth to measure cross-state differences in labor market conditions.State-level evidence We assess cyclical fluctuations in the national labor force participation rate by examining differences in cyclical labor market conditions and labor force participation rates across states (see also Erceg and Levin 2013).Any correlations between changes in labor market conditions and participation rates at the state level are likely to be mirrored at the national level as well.We define a downturn as the period between the peak and trough in national payroll employment.These periods are similar to official recession dates identified by the National Bureau of Economic Research (NBER), but they can differ.These include comparisons across demographic groups; across different categories of unemployed workers and people out of the labor force who want work; and of actual outcomes versus hypothetical outcomes based on adjusting demographic information (Aaronson et al. 2012; Van Zandweghe 2012; Hotchkiss and Rios-Avila 2013).

Younger people often are in school and older people often are retired, reducing their respective participation rates.

The data for the 1990––09 recession and recovery periods were adjusted to minimize the effects of population estimate revisions and the 2010 surge in hiring of census workers.

All calculations are weighted by the relative size of each state’s labor force.

Figure 2 State employment, participation rates during recession Changes from January 2008 to February 2010 Sources: BLS/Haver Analytics and authors’ calculations.

Note: Line weighted by state’s fraction of total labor force over period.

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To assess the role of cyclical factors in the current recovery, we examine state-level variation in the relationship between changes in the labor force participation rate and changes in employment over several business cycles.

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