Why Is the US Unemployment Rate So Much Lower?

The US unemployment rate is so much lower because the population is so much older. This paper argues that in the absence of the baby boom, the unemployment rate would neither have increased from 1957 to 1979, nor have fallen in the subsequent two decades. The paper also considers other demographic changes: The most quantitatively significant is the increased educational attainment of the labor force. Since more-educated workers have lower unemployment rates, it might appear that this should have (counterfactually) caused a secular decline in unemployment. However, there are theoretical reasons to believe that an increase in education will not translate into a reduction in unemployment, and independent empirical evidence tends to support this view.