Yellen: Immigration Contributes ‘Substantial’ Amount to Labor Force Growth

YELLEN: "There's not pretty much that we can do to affect labor force growth, although there's a tendency in the strong job market for people who may have become discouraged and dropped out off the labor force because they felt there were inadequate job opportunities.  There is some tendency for people to re-join the labor force and to get employment. And we have certainly seen that in this recovery.  Now, unfortunately the underlying trend in labor force growth has slowed substantially. The most dramatic impact comes from the baby boomers entering the retirement years. And although more recent cohorts of retirees are working more and participating in the labor market more than earlier cohorts did,
still there is marked drop off in the labor force participation when people reach the retirement years. So the growth in the labor force is slowed. And I would say that at this point that immigration actually contributes substantial amount to labor force growth as well, so  the population growth with these demographic trends and immigration are the main one shaping the labor force growth. And that's part of the reason why our economy it looks like it has potential to grow at this point unless there's a pick up in either labor force growth, their productivity looks to be in the neighborhood or maybe a little bit less than 2 percent which is really lower than where it is accustomed to by historical standards."