Studies of Economic Change

Variable

The analysis of the parameters of the economic performance as the gross domestic product, the population, the employment rate, the hours worked, and the labour productivity came to the conclusion only the hours worked and the employment rate remain as controllable variables.

But our aim is also to analyse the development of the unemployment rate. Therefore we have to define the employment rate and the labour force participation. The labour force participation includes in addition to the employment rate also the unemployment rate. And the labour force participation depends amongst others on the demographic development which is periodically analysed by the Statistisches Bundesamt in its population forecasts.

Equation: Employment rate + Unemployment rate = Labour force participation

From a static point of view the unemployment rate can be considered as variable. By considering the demographic development over the time the static point of view can be replaced by a dynamic point of view as the labour force participation depends on the population pyramid and can be controlled in the medium and long term by political actions. The employment rate becomes a function of the unemployment rate and the labour force participation which is a function of the demographic development by itself.

Because of the intolerable high unemployment rate according to the static point of view and the fact that only the unemployment rate and the hours worked remain as controllable variable the following becomes evident:

1. If the working hours remain constant only the unemployment rate can change.
2. If the unemployment rate should be reduced only the hours worked can be adjusted..

According to the subchapters it can be said:

1. Employment rate = Function of the unemployment rate and the labour force participation:     not variable
2. Unemployment = Function of the political will:     variable
3. Hours worked = Function of the political will:     variable
4. Labour force participation = Function of the demography:     not variable