Labor Supply and Employment in Less Developed Countries

Abstract

The populations of less developed countries, compared to those of economically advanced countries, have relatively few adults of working age and many children as a result of their high birth rates. Their young people enter the labor force at an earlier age, and their men continue working to more advanced ages, but this prolongation of the years of eco nomic activity is not enough to compensate for the heavy load of dependency inherent in the youthful age structure of the population. The proportion of women engaged in economic activities is also higher on the average in less developed coun tries, if available statistics reflect the true position; but, even so, the ratio of the economically active to the total population tends to be lower than in the more developed countries. At the same time, the high birth rates of less developed countries make for rapid growth of the economically active as well as the total population; typically they have two or three times as many persons entering the labor force annually as are separated from it by death and retirement. The peoples of these countries are thus doubly unfortunate: they suffer from a heavy depen dency burden and at the same time have to accommodate large annual increments in the numbers clamoring for employment opportunities. With limited natural resources and inadequate capital formation, such opportunities are insufficient to satisfy the demand. The results are seen in mass underemployment, particularly among agricultural households and urban workers- on-own-account, and in unemployment among those who cannot resort to submarginal self-employment. In various ways, it is possible to mobilize and channel this idle labor so as to increase the productive capacity of the economy and to raise levels of income.