Population,Labor Supply,and Employment in Developing Countries

Abstract

Over the past thirty years, almost all developing countries have been suffering from severe underutilization of their rapidly growing work force, manifest in the first place in various forms of underemployment rather than in open unemployment. Prospective trends in the working-age population suggest an even steeper increase in labor supply and respectively rising employment problems for some time ahead. Policies promoting economic growth have proved insufficient to solve the problems. New strategies are called for, aimed explicitly at mobilizing the ill-used labor potentials for developmental purposes. This article consists of three parts. The first one gives a general outline of the relationships between population, labor supply, and employment, while the second one deals with empirical trends and structural changes in labor supply in the second half of this century. Both analyses bring forth the arguments for comprehensive approaches to the employment problem, which are presented in part three.

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References

1. The labor force includes all persons who—in a given period—are employed or looking for a job. The terms “labor supply,”“labor potential,” and “work force” are used interchangeably.

2. Hilde Wander, “Die Beziehungen zwischen Bevölkerungs- und Wirtschaftsentwicklung, dargestellt am Beispiel Indonesiens,” Kieler Studien, Forschungsberichte des Instituts für Weltwirtschaft an der Universität Kiel, ed. Prof. Dr. Drs. h.c. Erich Schneider, no. 70 (Tübingen: J.C.B. Mohr [Paul Siebeck], 1965), pp. 72-73, 144 ff.

3. “Underemployment,” in contrast to open unemployment, means that persons—although employed—are confined to short-term, unstable, unproductive, or other unremunerative work.

4. Alejandro Portes and Lauren Benton , “Industrial Development and Labor Absorption: A Reinterpretation,” Population and Development Review, 10:589-611 (Dec. 1984).

5. Hilde Wander , “What Does It Cost to Support the Young and the Old Generation?” in Economic Consequences of Population Change in Industrialized Countries, ed. Gunter Steinmann (Berlin: Springer Verlag, 1984), pp. 238-257.

6. Paul K.C. Liu , “Toward a Closer Integration of Population in Development Policies in Taiwan,” Industry in Free China 56(2):9-28 (Aug. 1981).

7. International Labor Office , Labour Force Estimates and Projections, 1950-2000 (Geneva: International Labor Office, 1977), vols. 1-6.

8. For techniques, see ibid., vol. 6.

9. Developing countries include Asia south of the USSR, except Japan and Israel; Africa except South Africa; Latin America except Argentina, Chile, and Uruguay. Polynesia and Micronesia are disregarded because of small size.

10.

10. M.J.D. Hopkins , “A Global Forecast of Absolute Poverty and Employment,” International Labour Review, 119:565-577 (1980).

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11. Portes and Benton , “Industrial Development and Labor Absorption,” p. 103.

12.

12. Deborah S. Freedman , “Consumption Aspiration as Economic Incentives in a Developing Country: Taiwan,” in Human Behaviour in Economic Affairs, ed. Burkhard Strumpel , James N. Morgan , and Ernest Zahn (Amsterdam, New York: Elsevier, 1972), pp. 229-260.