Research Affiliates: 1% ... The New Normal Growth Rate?

November 16, 2012


Immigration has also plummeted. The Pew Hispanic Center states: “From 1995 through 2000, we estimate that 3 million Mexicans moved to the United States, and nearly 700,000, including family members born in the United States, went home. From 2005 through 2010, we estimate that about 1.4 million Mexicans arrived, and the same number, including U.S.-born children, left. Considering everything, a return to the migration levels of the late 1990s now seems inconceivable.” Given these declines in both fertility and immigration, forecasts for annual population growth of 0.8% seem optimistic for the next two decades (see Figure 1).

Employment Rate
During the second half of the 20th century, the proportion of our population over age 16 who were employed rose from 56% to 64%. As shown in Figure 2, more than all of this growth is attributable to the rise of the female employment rate from 32% in 1950 to 58% by 2000. The male employment rate declined steadily from 82% in 1950 to 72% in 2000.

The female employment rate crested in 2000, and the male rate has continued its long gradual decline. The total employment rate declined from its peak of 64% in 2000 to 58% in 2010. Some of this decline is attributable to the recession; some to policy changes that reduce incentives to work (Mulligan, 2012); and some to our aging, a trend that will undoubtedly continue. It bears noting that the effect of demography on employment is an issue on which a libertarian investment manager can agree with neo-Keynesian economist: Paul Krugman (2012) explains this same effect on his blog.



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