Question

What impact does a lower fertility rate have on the labour force participation rate? What impact would you expect an increase in the divorce rate to have on the labour force participation rate? 8 marks

Answer 1

A lower fertility rate means that over time the mean age of the population will increase and there are relatively fewer people whoa re looking for a job. Thus the total working-age population can decrease and LFPR can increase. The LFPR will increase specifically for women as many women will nor exit the labor market due to pregnancy and subsequent child care.

An increase in the divorce rate will increase the labor force participation rate. This is because, in a married household, a large proportion of couples do not both work. It is usually the males who are in the labor force. But due to a divorce, women will have to sustain themselves economically and financially and will need to get employment. Thus, they will enroll in the labor force and LFPR will increase.