Labour force and changing age structure in selected developed countries: A comparative study

Abstract

The low fertility rate in many developed countries has given rise to a phenomenon known as “population aging”, characterized by an increasing proportion of men and women aged 60 and over. Population aging has had so far a favorable impact on the labour force. The crude labour force rate, i.e., the proportion of the labour force to the total population, has increased in recent decades in Canada, the USA and Japan. This increase may be examined in terms of a) the age effect and b) the rate effect.

The “age effect”, calculated as the change in the proportion of the labour force if the age-specific labour force participation rates had remained constant at the initial values, has been quite positive for men and women in the past decades. The “rate effect”, on the other hand, calculated as the change in the proportion of labour force if the population age structure had remained constant, has been negative for men. In sharp contrast, the rate effect on the female labour force has been positive and has reinforced the positive age effect. Consequently, the size of the female labour force has soared and a striking convergence of male and female labour force participation rates has emerged. The extent of this convergence pattern, especially by specific age groups, may hold the key to future human resources and economic growth in developed countries.