Labour Shortage in Hong Kong: Causes,Consequences and Policies*

This paper addresses the issue of labour shortage in Hong Kong. Labour shortage is a secular phenomenon caused mainly by a stagnation in the growth of the labour force. The major long-term factors that explain this stagnation are a decline in fertility, a fall in the labour participation rate, a reduced intake of immigrants and a rising outflow of emigrants. Labour imposes a capacity constraint on the growth of the economy. This paper considers policies which may alleviate the supply constraint on the economy, including reducing emigration, importing labour and increasing immigration intake. These policies, which would lead to a faster expansion of the labour force, are evaluated and compared.