The increase in the participation rate stands out among labour market developments in Portugal in recent years. After the drop observed in 2020, the participation rate resumed its upward trend in the second half of 2021, in line with the evolution of economic activity. The increase in the participation rate reflects the usual procyclical behaviour of this variable, against a background of recovering economic activity. However, there are structural effects, notably the increase in female labour market participation and the increasing weight of higher levels of schooling, which have higher inactivity opportunity costs.

The increase in the share in the population of individuals with a higher level of education (education effect), with typically higher participation rates, has contributed to the rise in the participation rate. This contribution is considerable for the female population. In 2021, the share of women with tertiary education in the labour force stood at 20.6% (11.3% in 2011), which compares with 13.3% for men (7.8% in 2011). In turn, the effect stemming from the change in the participation rate by education level (intra level of education effect) is negative, with a significant reduction in the participation rate for individuals with up to lower secondary education (from 38.8% in 2011 to 30.7% in 2021).

For more details see Box 4 “Recent evolution of the participation rate in Portugal: decomposition by gender, level of education and demography effect” of the Economic Bulletin of May 2022.

Prepared by Fernando Martins, Ana Catarina Pimenta and Domingos Seward. The analyses, opinions and results expressed here are the sole responsibility of the authors and do not necessarily coincide with those of Banco de Portugal or the Eurosystem.

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