Too Much Child Rearing Leads to Low Unemployment Rates

Good news for Canadians, the unemployment rate has declined steadily since 2010 (8.2 per cent to 6.8 per cent as of September 2014) and thousands of new jobs are on the horizon across the country. According to a study by TD Economics, the falling unemployment rate is due in part to a declining labour force participation rate, which evidently is particularly by women.

The participation rate, as described in the TD report, is the share of working age people who are working or looking for work. As women retreat from the work force and jobs begin to open up, it's hard not to compare today's work force reality, as outlined for us in the report, with similar incidents of 'reform' from the past.

“The declining participation rate has been largely the result of a pull-back in female participation. A rising working age population together with a shrinking labour force has resulted in falling female participation rates.”

The recent drop has been particularly highlighted by working-aged women between the ages of 40-49 years.

Photo Caption: TD Study

The TD report states that three factors have contributed to the decline. First: female-dominated industries experienced a decline in 2013 and have yet to fully recover. Education, health care, retail, and administration fields saw an employment fall last year.

Second: Immigration, particularly the demographic of women between the ages of 40-49, have been offsetting population declines. Immigrant women tend to have lower participation rates.

Lastly, the decline in labour participation is directly correlated with the fact that women are choosing to postpone childbirth in order to focus on their careers and life-goals.

“The birth rate among women aged 35-39 has risen markedly in the 10 years leading up to 2011 (the most recent data available). As a result, the average age of the mother at childbirth is 29.6...It is possible then, that falling female labour force participation rates among women aged 40 to 49 may be a result of child-rearing decisions,” read the report.

Photo Caption: TD Study

The TD study suggests that a woman's choice to postpone child-rearing directly affects the probability of returning to the work force later on in life. The drop in female participation in the work force has led to a decline in unemployment, implying the idea that a decline in female participation is beneficial to the Canadian work force.

“Because the unemployment rate is calculated using individuals who are working or looking for work, a decline in the participation rate will, all else equal, result in a fall in the unemployment rate,” read the study. “Women giving birth later in life may have less financial incentive to return to the labour force quickly, instead relying on savings and/or their partner's income."

However, the study remains hopeful stating that "a recovery could unfold."

Photo Caption: TD Study