Service Sector Employment Growth and Labor Force Participation: National and Regional Evidence

Abstract

The growth of the service sector's share of total employment has obvious consequences for labor force participants. The issue has long been discussed, though little analysis has been done using vector autoregressive techniques, especially in determining the regional differences in the impact of this trend. Here I examine the potentially disparate impact of the growth in the service sector's share of total employment across gender and region. At the national level I find that this growth lowers labor force participation rates, though men and women experience a similar impact. I also find substantial variation in the impact ofservice sector growth across regions, with the South and West being isolated from such changes, and men and women experiencing different reactions in the Midwest and the Northeast. (J21)