Potential labour force in full-time equivalents

We propose a concept of potential labour force in full-time equivalents which can be used to measure aggregate labour supply in terms of hours worked. It is designed to calculate labour input in production function estimates of medium-run potential output. Particular attention is paid to the in uence of immigration and the interde- pendency between labour force participation and working-time decisions. Assuming that participation in working life among older people and women will increase, and if migration surpluses remain high, the potential labour force is likely to be stabilised until 2020 despite the evident curbing impact of the age cohort eect. However, a decline is to be expected in full-time equivalents due to the negative repercussions of rising labour force participation on working hours.