Labour force participation at the macro level, typically expressed in terms of labour force participation rate (LFPR), is determined by a nexus of social and policy factors namely cultural perception and work arrangement practices on the one hand, and economic and structural factors such as labour market conditions and demographic composition on the other.
In particular, educational attainment is often regarded as a key economic factor determining LFPR. It comes into the decision to work in two ways.
First, higher educational attainment is often associated with higher wages, which in turn suggests that the opportunity cost of not working is higher for the more educated ones.
Second, those who have received more education tend to be more versatile and adaptable to changes in the labour market, essentially meaning a higher chance of getting employed. They are thus less prone to long term unemployment or to become discouraged workers.
A detailed analysis of LFPR(1) of those aged 25 – 64 over the last two decades, who accounted for almost 90% of our labour force in 2013, indeed demonstrated that educational attainment plays an important role in determining Hong Kong’s labour force participation.