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Chart 1: Rising participation is often the main factor behind employment gains
In contrast with a commonly-held view, rising labour market participation (and not lower unemployment) is often the main factor behind employment gains. The employment to population ratio rose during 1991-2001 in two-thirds of all OECD countries, consistent with a trend improvement in overall labour market performance. This improvement, where present, usually reflected the combined impact of reductions in both unemployment and inactivity rates, although the relative contributions of the two varied a great deal across countries. For example, in the European Union, where raising employment rates has become a prominent policy goal, the fall in inactivity (1.8 percentage points) contributed three times as much as the 0.6 percentage-point fall in unemployment rate (see also Chart 1.3 of the publication).
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