A Study On The Relationship Between The Labor Force Participation Rate And The Economic Growth In Sichuan Province

More and more scholars are eager to research the labor force participation rate in recent years. No matter from the aspect of the employment situation or the golden opportunity of demographic bonus, the labor force participation has played an important role. The lager number of the employed population will increase the labor force participation rate directly, to the contrary, the labor force participation rate will reflect the excellent employment situation. Besides, only if the labor force participation rate remained at a high level and the unemployment rate remained at a low one, the advantages of the age structure of the population would show to us.This thesis based on the economic development of Sichuan Province. To start from the labor force participation rate, it tells us the relationship between the labor force participation rate and the rate of economic growth in order to promote the fast and stable economic development.On the basis of the reflections above, the thesis will be divided into six parts. The first one is introduction, which introduces the purpose of this paper, the significance, the technical means, and the innovations points. The second one is the literature review. The third one is the descriptive statistical analysis of the labor force participation rate in our province. The fourth one is about the VAR model of the labor force participation rate and the economic growth rate. Furthermore, to use of the impulse response function to analyze the system which include both the LFPR and the economic growth rate. The fifth part tells the main factors of the labor force participation rate in our province through the analysis of the cities panel data regression model. The last part is a summary of this paper.In this paper, we will make two econometric models, including time series data and panel data, to analyze the relationship between the labor force participation rate and the economic growth rate. We will establish VAR (1) model of the labor force participation rate and the rate of economic growth by using the data of1995-2010Sichuan Province. The results show that there is Granger causality and positive correlation between the province’s labor force participation rate and the rate of economic growth. There is a certain lag period in the change of economic growth rate in response to changes in the labor force participation rate. The individual fixed effects model is based on the panel data of the cities’ labor force participation rate in2005-2010in Sichuan province. Through removing the no significant variables, we get the perfect model in the end. It tells us that there is inverted U-shaped curve between the gross regional product and the labor force participation rate. Unemployment rate, urbanization rate, the welfare level and the level of education have a significant impact on the labor force participation rate. The sex ratio, the total investment in fixed assets and the average money wage level do not. In addition, the intercept of each city in the panel data fixed effects model shows that there is space aggregation effects between the geographical location of the cities and the level of labor force participation rate. Finally, the relevant policies of promote the economic development and improve the labor force participation rate come out through the analysis of these models above.