2. LABOUR FORCE PARTICIPATION AND SECTORAL DYNAMICS OVER THE BUSINESS CYCLE: REGIONAL EVIDENCE FOR ECUADOR

Ecuador is a developing country characterised by a high degree of informality and has undergone significant economic transformations that have had an impact on the labour market. Despite the national trend of a slight decline in labour force participation, there are notable differences in development across the country, making it an interesting case study. This article examines the determinants of regional differences in labour force participation and the sectoral structure of employment. Using a regional panel data analysis, it identifies the cyclicality of labour force participation, formal and informal wage employment and self-employment for both sexes. The results of the decomposition highlight the significant influence of education, household conditions, age distribution and regional factors on regional labour force participation and employment composition. The results show that labour force participation has undergone significant changes over time and exhibits strong counter-cyclical behaviour. The analysis shows that formal employment is procyclical, while informal wage employment shows countercyclical fluctuations. Moreover, self-employment does not seem to be affected by the business cycle, except in recent years. Finally, it is concluded that women's participation in the labour force is more related to policies affecting the educational level of the population than to business cycle factors.