Thus, occupational polarization may be responsible for some of the rapid decline in employment and labor force participation among young people over the past decade. While part of this decline is likely attributable to the pursuit of additional education, employment and participation rates have also fallen for those youth who are not attending school, suggesting that education-related explanations are not the whole story.
Indeed, research by the Federal Reserve Board’s staff has found that greater crowding-out from adults can account for much of the decline in youth participation.5 This crowding-out may have undesirable long-term consequences for the current generation of younger adults, as some research finds that poor job opportunities early in one’s working life can lead to lower employment and wage rates in the future.6 The aggregate demand shortfall To this point, I have portrayed a labor market still disabled by the trauma of the financial crisis and the recession that followed, but also beset by chronic maladies whose symptoms predate the crisis.