James d. Gwartney

Exhibit 1: Employment-to-Population Ratio by Gender
(Population Aged 15–64) in Ukraine, in percent
0
10
20
30
40
50
60
90
80
70
%
a) Employment-to-population ratio by gender, 2000-2014
b) Employment rates by gender and education, 2014
men
women
female
male
0
10
20
30
40
50
60
70
2014
2013
2012
201
1
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
second stage of tertiary (5B)
first stage of tertiary (5A)
incomplete tertiary
post-secondary non-tertiary (4)
upper secondary (3)
lower secondary (2)
primary or pre-primary (0-1)
%
Source: Labor Force Survey 2014.
What do you think happens to the birth rate as an economy grows and earnings rise?
Time spent on household responsibilities reduces the time available for market work. As
earnings rise, the opportunity cost of having children and raising a large family increases.
Therefore, the predicted result is a reduction in the birth rate and slower population growth.
The real world reflects this analysis. During the past two centuries, as the per capita income of

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a country increased, a reduction in the birth rate and a slowdown in population growth soon
followed. Moreover, this pattern has occurred in every country. Even though there are
widespread cultural, religious, ethnic, and political organizational differences among countries,
the higher opportunity cost of having children exerted the same impact on the birth rate in all
cases.
Opportunity cost is a powerful tool and it will be applied again and again throughout
this book. If you integrate this tool into your thought process, it will greatly enhance your
ability to understand the real-world behavior of consumers, producers, business owners,
political figures, and other decision-makers. Even more important, the concept will also help
you make better choices.