By Mary A. Burke (Federal Reserve Bank of Boston)
This paper identifies the main forces that contributed to the decline in labor force participation in New England between 2007 and 2015, as well as the forces that moderated the region’s decline relative to that of the nation. This exercise contributes to an assessment of the outlook for participation in New England moving forward. Similar to previous findings pertaining to the United States as a whole, the single largest factor in the recent decline in labor force participation in New England was the shifting age composition of the region’s population. In particular, the share of New England residents at or above retirement age (65 and over) increased by a considerable margin, while the share of residents of prime working ages (25 to 54) decreased, and these demographic trends were more pronounced in the region than in the nation as a whole between 2007 and 2015. Partly offsetting the region’s demographic disadvantages, the participation rate among those ages 65 and over increased more sharply in New England than in the United States since 2007, while the participation rate among prime-age workers decreased less sharply in the region than in the nation. Together, these advantages can more than account for the lesser decline in labor force participation in the region compared with the United States between 2007 and 2015.

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