One of the most important questions facing policymakers today concerns the depth of the current pool of available labor. Labor force participation collapsed during the pandemic and has been very slow to return, leading many to believe that there has been permanent scarring and that many who left the labor force will not return. If that is the case, it would suggest that there could be far more sustained upward pressure on wages and, in turn, inflation, than is expected. For example, there have been many anecdotal discussions about the labor force with regard to workers retiring “early” following the pandemic. Thus, the size and significance of this retirement age cohort is a frequent question and is the topic of this Economics Weekly.

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Richard de Chazal, CFA is a London-based macroeconomist covering the U.S. economy and financial markets.