CHAPTER 1
Introduction
1.1. Objectives and Scope of the Study
A nation's economy has been described as a huge machine that devours natural resources, labor, and capital and turns out the multitude of goods and services that make up the gross national product. But the economy is not an inanimate contraption of steel and concrete; it is primarily an organization of human beings, and it has some attributes of a living organism. It can grow and expand its capacity to consume inputs and produce outputs; and, like a tree, how well it grows depends very much on the environment in which it is planted. For the growth of the economy, while the wealth of the natural environment is relevant, it is the human environment that is crucial. The social and political institutions, the scales of values, and above all the qualities of the people are primary ingredients of the soil and atmosphere in which economic growth will flourish or languish.
The labor force plays a central role in the growth of the economy, directly as the supplier of the most important input into production, and indirectly as the dominant influence in the human environment. The qualities of this environment and the qualities of the labor input are inseparable. Many economists attribute more importance to these qualities than to any other cause of differences in the wealth of nations and their economic progress. Major importance is attached to the skills and aptitudes of the workers, their educational qualifications, the state of their health, their ambitions, their mobility, and their readiness to adopt new ideas and methods. The formation of such qualities is not exogenous to the economic system. It is fostered by the development of modern economic organization and nourished by consumption of the products, including not only such items as educational and medical services and essential food, clothing, and shelter, but also a wide range of other goods and services that may stretch the mind and whet the appetite for a better living.
Quantitative as well as qualitative aspects of development of the labor force are important: its growth in relation to the growth of population and capital and to the advance of technology; its composition in terms of sex, age groups, and other characteristics of workers; its deployment among industry sectors, occupation groups, and status categories (employees, employers, self-employed, and unpaid family workers); its distribution between rural and urban sectors and among regions of a country. The formation of qualities of the labor force cannot be independent of these variables, and all are linked in mutual relationships with the productivity and dynamism of the economy. Efforts to manage economic and human development demand knowledge of these relationships — a fund of knowledge that the social sciences have only begun to accumulate.
Within the wide field of research relevant to these questions, the present study focuses on some basic demographic dimensions of the labor force and their changes in the process of economic development. The dimensions considered are the relative size of the labor force in proportion to the population, and measures of participation in the labor force by males and females and various age groups. The labor force/population ratio is one factor in the level of output per head that the economy is capable of producing. The labor force participation rates (or activity rates, as they will be called for convenience) relate to the demographic composition of the labor force as an aspect of its qualitative development as well as to the organization of the society and the style of life. Factors that influence these dimensions of the labor force and their changes will be examined, and an attempt will be made to define typical patterns of their changes in countries undergoing economic development and demographic transition.
The study is based on a world-wide compilation of labor force and population statistics of censuses taken during the two decades 1946–1966. This provides measures of labor force dimensions for a hundred countries in varied economic, demographic, and cultural circumstances. Associations between economic development and labor force characteristics can be studied both in a cross-sectional view of differences between countries and a longitudinal analysis of changes during the intervals between censuses.
Thanks to the progress of census taking in less-developed countries since World War p, the data base for such a comparative international study is much broader now than it was in the past. Before the war, limitations of data confined research on labor force characteristics largely to developed countries. Although the historical statistics of some of these countries provided some view of their experience in less advanced stages of development, this view was obscured by the defects of labor force classifications in the early censuses and the discontinuity caused by changes in the classification systems from one census to the next. Progress since the war in modernizing census methods in less-developed countries, and the taking of censuses in many countries where this primary statistical source had been lacking, have opened a much wider and clearer view of labor force characteristics and changes under conditions of low income and little-developed technology and economic organization.
A path-breaking study undertaken during the 1950s by the United Nations Population Division, based on the data of early postwar censuses, produced a broad cross-sectional picture of patterns of participation in the labor force by sex-age groups of the population in countries at different levels of development. This was supplemented by the Collver-Langlois study of economic activities of the female population in metropolitan areas of countries around the world, which also ranks as a classic in this field. The present study goes farther along the paths marked out by those earlier studies, taking advantage of the wider coverage of countries and fuller classifications of labor force characteristics furnished by more recent censuses. Most important, a temporal dimension is added by the analysis of changes during the intervals between postwar censuses. The data from less-developed countries available to the authors of the earlier studies offered little scope for this.
A recent study by the International Labour Office, undertaken to obtain a basis for a world-wide series of labor force projections, includes an analysis of variations of labor force participation rates and their changes during the decade of the 1950s in countries at different levels of economic development, which partly parallels the analysis in the present study. The patterns of variations found in the I.L.O. study are similar, on the whole, to those indicated by the present study, in spite of some important differences in the methods of analysis and the treatment of the problems of non-comparability in the census measures.
The monumental work of the United Nations, The Determinants and Consequences of Population Trends, recently published in a revised and updated edition, contains a chapter on "Demographic Aspects of Manpower," in which findings of many studies on the variations of labor force dimensions and factors influencing them are summarized, with extensive bibliographical references.
No study of the kinds of questions addressed here can be expected to reach definitive conclusions. The findings are inevitably somewhat obsolete when the work is completed. As the results of new censuses become available, the scope for analysis widens. Especially for longitudinal study of changes in labor force dimensions in countries undergoing economic development, the material is being greatly enriched by tabulations of the returns of censuses taken around 1970, which could not be included in the data base for the present study. Its objectives have been achieved if it has charted useful directions for future research and if, in the meantime, its findings serve provisionally as useful contributions to knowledge of human factors in economic growth.
1.2. Coverage of Data
This study is based on a compilation of labor force statistics derived from national population censuses and demographic sample surveys taken in the years 1946 to 1966 inclusive, in countries which had 500,000 or more inhabitants in 1960. Sample survey data are included instead of comprehensive census data for some countries where the latter were lacking, but no attempt has been made to compile time series of sample survey data for countries where such surveys are conducted currently as supplements to census benchmarks. So far as possible, data were drawn from original publications of the national statistical agencies. Where the national publications could not be obtained, figures were taken from the United Nations Demographic Yearbooks and the International Labour Office Year Books of Labour Statistics.
Statistics of at least one census in the period 1946 to 1966 were obtained for 100 of the 136 countries listed in the United Nations Demographic Yearbooks with an estimated 1960 population of 500,000 or more. Statistics of two or more censuses, providing measures of labor force changes during intercensal periods, were obtained for 58 countries. Data of some censuses were not included in the compilation because they were obtained too late to be processed and tabulated, because large components of the population or areas of the country were not covered by the enumerations, because a comprehensive and consistent set of population and labor force tabulations was not found, because conditions of the economy and labor market at the time of the census were abnormal, or because the labor force enumerations were judged to be inconsistent with those of other censuses of the same country. The censuses that were excluded for various reasons are listed in Appendix B.1. Labor force estimates for some countries, shown in the I.L.O. Year Books of Labour Statistics, which appeared not to be based on national population censuses or demographic sample surveys, were not included.
This compilation of data provides comprehensive coverage as of at least one postwar census for countries in some regions, but relatively poorer coverage in others. Table 1.1 shows the extent of coverage of nine regional groups of countries that have been defined for the analysis of regional variations, as explained in chapter 3. It can be seen that there is serious under-representation of the less-developed regions, especially tropical Africa. The defects of coverage are greater when it comes to measures of changes between censuses. The regional distribution of the fifty-eight countries for which measures of intercensal changes were obtained is very uneven; tropical Africa is without any representation, and the representation of Moslem countries, South and East Asia, and Eastern Europe leaves much to be desired. In analyzing these data, we must be wary of distortions resulting from the defects of geographical coverage as well as those due to error and noncomparability in the labor force measures.
1.3. Reliability and Comparability of Measures
According to internationally recommended standards for population censuses, the economically active population (labor force, in the terminology used for convenience in this study) is defined as those individuals who furnish the supply of labor for production of economic goods and services. The concept of economic goods and services in this context corresponds to the concept of income in statistics of national accounts. Thus the members of the labor force are the producers of a nation's income, and the remainder of the population can be considered as dependents in the sense that they consume income without taking part in the work of producing it. Included in the labor force are paid employees, employers and self-employed persons who work for profit, and unpaid family workers (relatives who assist without pay in a family-operated income-producing enterprise such as a farm, store, handicraft industry, etc.). Unemployed workers are included as well as those actually employed in income-producing jobs at any given time. Outside the labor force are housewives, students, retired and disabled workers, institutional inmates, young children, and others who do not work at income-producing jobs, although they may receive income in the form of rents, dividends, pensions, etc.
While this basic concept is fairly well established in census practices in most countries, there are important variations in details of the definitions and ways of formulating the census questions that detract greatly from international comparability of the measures. Comparability is impaired further by varying interpretations that field workers and respondents may give to similar questions and definitions, and by errors and biases in responses and coverage of the enumerations.
The most important point of divergence in definitions is in the classification of individuals who play a dual role, both as income producers and as housewives, students, etc. In some censuses, the questions refer to the individual's principal activity. Numerous part-time, seasonal, and other irregular workers may then be left out of the count of the labor force. In other censuses, it is provided in principle that all persons engaged to any extent in work for pay or profit or as unpaid family workers should be counted in the labor force, although it is unlikely that a complete enumeration would be achieved in any case. The latter basis of enumeration is the one specified in international standards for population census statistics, except that in the case of unpaid family workers some minimal amount or regularity of involvement in the work of the family-operated enterprise is recommended as a qualification for their inclusion in the labor force.
Another important point of divergence is the time reference of census questions about activities. Formerly, in most censuses, no particular time reference was specified; the questions referred more or less vaguely to the individual's usual occupation. The practice of asking about activities during a specified period of time has been gaining vogue in recent censuses, and this is recommended in the international standards, although some experts express doubts about the suitability of this procedure, especially for censuses in less-developed countries where measures of seasonal variations are lacking. The time references specified vary: sometimes it is the census day or a brief period such as one week, sometimes several months or a year, sometimes the "working season." These variations may have important effects on the enumeration of seasonal and casual workers and of persons having recently joined or withdrawn from the labor force. The longer the time reference, the larger will be the measure of the labor force if all persons involved in income-producing work to any extent during the specified period are included.
Definitions of unemployed workers also vary. When the concept of usual activity was the basis of labor force enumeration, the unemployed could be identified as persons having a usual gainful occupation who were out of a job at the time of enumeration, although the measures of unemployment obtained in this way were generally not very satisfactory. In recent censuses where a specific time reference has been adopted, the unemployed have been identified by various kinds of questions relevant to availability for employment: whether they were seeking work, wanted work, and so forth, during the specified period. Variations in the forms of such questions and in details of the definitions and instructions may greatly affect census measures of unemployment, and effects on the measures of the labor force may be substantial where there is much unemployment.
Although it is in keeping with the basic concept of the labor force to include armed forces, since they are paid employees (although their service may be involuntary), armed forces are classified in some censuses with the population not in the labor force, while in others they are excluded from the coverage of the census. Sometimes a distinction is drawn in these respects between regular members of the armed forces and temporary conscripts, or between those living in military quarters and those living outside. When armed forces are either counted as not in the labor force or excluded from the census, the effect is to understate both the absolute size of the labor force and its proportion to the population. Measures of the male labor force are affected proportionately more than those of the total of both sexes, and the effect may become very important when measures for military age groups of the male population are considered.
In addition to the formal definitions, census measures of the labor force are influenced by the phrasing of the questions and arrangement of the census questionnaires, details of the instructions, and the care taken by respondents and interviewers to provide complete and accurate information. Popular preconceptions and the level of literacy in the population are also influential factors. The same questions, definitions, and procedures for enumeration may produce different results in different cultural settings.
