EMPIRICAL ANALYSIS OF LABOUR FORCE PARTICIPATION IN SINGAPORE

Abstract

An understanding of the labour market permits the repercussions of public policy to be better anticipated. While the research in this area is substantial, few studies been done in Singapore. An attempt is thus made in this paper to study labour force participation decisions in Singapore. Factors such as the net-of-tax wage rate, the unemployment rate and the fertility rate are employed in explaining variations in the participation rates of the labour force, stratified by gender, marital status and educational attainment. The empirical results would enable a prediction of the response of the labour force participation rate, given a change in any of the variables. It is found that the labour force participation rates of the groups differ in their response to the factors. Nevertheless, in general, there is a strong negative relationship between the labour force participation rate and the unemployment rate. Fertility, if significant, has a negative relation with the participation rate. The effect of the net-of-tax wage rate is however, less conclusive. One implication of these results is that policy requirements to influence the labour force participation rates differ for the various groups. Despite the limited data set that is employed in the analysis, it is hoped that this study will shed some light on labour force participation behaviour in Singapore.