EFFECTS OF ECONOMIC DEPENDENCY ON LABOUR FORCE PARTICIPATION RATES IN LESS DEVELOPED COUNTRIES 1

Abstract

THE purpose of this paper is to analyse the effects of economic dependency on labour force participation rates (LFPRs) in less developed countries (LDCs). It has been frequently hypothesized that increased dependency ratios lead to higher labour force activity: to meet the requirements of feeding more children, a greater proportion of adults, and perhaps older children also, may join the labour force.2 It is important to examine this effect of increased dependency on labour force activity because it is one of the principal positive economic effects hypothesized about high fertility and population increase. If higher participation rates result in greater output per family, this could at least partly compensate for the increased consumption burden per family caused by increased dependency ratios. This would in turn help explain the otherwise surprisingly low relationships observed between dependency ratios and saving rates.3 Moreover, better knowledge of how this and other factors influence labour force participation should help in the development of improved techniques for projecting the future size and composition of the labour force, which is important in longrun economic planning.