Projecting Labour Force Change

The range of statistical techniques available to the modern econometrician is so wide that the zealous advocate can often "torture the data until it confesses."

Macroeconomic models project future activity at a high level of aggregation, largely disregarding regional, occupational and demographic characteristics of labour supply and demand. The prospect of tailor-making an economic model, which could capture this degree of detail is beyond the scope of the current research project. Even given sophisticated mathematical models, the statistical forecasting of future employment is fraught with errors, guesses and assumptions -- many unstated and many more unrecognized.

Some sense of the equivocation of labour force projections may be had from the Task Force on Labour Market Development's 1981 report:

In the case of demand for and supply of workers to particular occupations, our information in incomplete for both past and future periods. With respect to the numbers of people employed in particular occupations in recent years, we are forced to estimate the occupational distribution of employment within industries on the basis of information collected in the early 1970s. On the supply side we have very little information on the amount of emigration by occupation and we have none on the extent to which inter-occupational mobility has occurred.

As a consequence, there is likely to be a substantial amount of measurement error in the historical data. Our estimates of prospective future imbalances ... over the period to 1985 are adjusted to take account of our estimates of the measurement errors stemming from inadequate and incomplete data. These estimates, given the measurement difficulties, can only be used as crude indicators of the directions of change in labour market conditions. In effect, they assume that the amount of informal industrial training will be similar in the future to that which existed in the past, that the level of emigration will remain constant, and that the degree of occupational mobility between groups of trades will not change over time.

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