How many people enter the German job market per year

brainteaser Case Case Interview Guesstimate
Recent activity on Apr 29, 2018
2 Answers
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Anonymous A asked on Apr 29, 2018

Hi guys,

I really do not know how to approach this kind of guesstimate. I mean i would start saying there are 80 Mio. in total in Germany and about 12 Mio around 18-30 years old. After that I can only say ok from the 18 to 22 years old 25% enter the job market, 23 to 26 35% and so on but that is not really detailed and easy to attack. Can you help me out and give me an idea for an approach. I would be very grateful. Thanks

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Andrea
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replied on Apr 29, 2018
Former BCG Principal and decision round interviewer

Maybe oversimplistic but my approach would be the following:

I would start by assuming that every person who is born in Germany at a certain point in his/her life (18,23,30 years old...) will start working then that's a good base to start estimating the number of people who enter the job market each year. To estimate the numbers of people born in Germany each year I would take population and divide by average life expectancy * 1.x (the correction factor due to the fact that several western european countries have stagnant/declining populations). Several corrections to be made to this, initial, rough assumption:

-not everyone will enter the German job market (e.g. people who move aborad, people who do not want or do not need to work, people who died before reaching work age), therefore will need to assume a % and take that out

-immigrants (who are not born in Germany) will enter the job market too So would take a % of annual immigrants and add it to the number

-(this might need to be clarify during the prompt) people who are re-entering the job market after a sabbatical, unemployment, staying at home, etc

Hope this helps,

Andrea

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Anonymous on Apr 29, 2018

Thank you so much for your help, Andrea. I fully understand the three points you made here but I do not really get the initial assumption. Yes, more or less all will start working at some point, BUT in different points in time. A certain percentage of 18 years old will start working at this age but others do not. I do not really get how this is connected to estimating the number of people born in Germany. Regarding your result: There are around 80 Mio. people in Germany, life expectancy is 80 years. So we have 1 Mio in every age group does that mean my initial assumption between 18 and 30 would be 12 Mio. people? And then adjust for the points u made below? I would be so grateful if you could break it down for me because this is actually my main problem in this case. But thanks a lot already

Andrea
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Content Creator
replied on Apr 29, 2018
Former BCG Principal and decision round interviewer

Simon, to reply to your comment. In my construct it doesn't matter at what age someone enters the job market because if you assume that:

-people born within a relatively medium/long period of time - let's say 20 years (as in 1975 - 1995) - all enter the market with similar distribution across age groups

-that the population and employment rate are relatively stable over a similar medium/long period of time (as in 1993-2013)

then what that means is that in each year during that period you will have a total population that enters the job market that is equal to the sum of the populations across different age groups that enter the job market that year. However since we just assume that people born in different year enter the job market with similar distribution across age groups and that population and employment are constant, what that means is that that number is equal to just the total % of people of a given year of birth who will ever enter the job market.

To help make this more practical using numbers, let's assume the following:

- people born per year: 100 (constant)

-people enter job market in only 4 years after birth, the distribution across which and sum of is constant across different birth years (this example assumes 80% of people born will go to work): year 1: 5 people, year 2: 15 people, year 3: 35 people, year 4: 25 people

In year 5 and following (equilibrium) the people that enter the market each year are:

people born in year 5-1 (year 1 of their life) ---> 5

people born in year 5-2 (year 2 of their life) --> 15

people born in year 5-3 (year 3 of their life) --> 35

people born in year 5-4 (year 4 of their life) --> 25

total # of people entering the job market in year 5 --> 80 which is the same number of people who will eventually find employment during their life span for years 1,2,3,4

Hope this clarifies a bit,

Andrea

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Anonymous on Apr 29, 2018

Ahh ok, I see. So what your saying is ok. 100 people are born, but according to distribution and all that only 80 go to work and thus in a particular year 80 go to work. Or if I would do the same for Germany where I would say we are 80 Mio. Life Expectancy is 80 and thus 1 Mio. are born each year. The start working in different ages (see your explanation) so in total every year around 800.000 will start working. Ok that sounds quite good. I guess there is no better way to approach this. Thanks a lot.

Andrea gave the best answer

Andrea

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