Question

what is the labor participation rate? Discuss if the participation rate has been increasing or decreasing during the past year.

Answer 1

The labor force participation rate measures an economy's active labor force and is the sum of all employed workers divided by the working age population. It refers to the number of people who are either employed or are actively looking for work. During an economic recession, many workers often get discouraged and stop looking for employment, resulting in a decrease in the participation rate. The number of people who are no longer actively searching for work would not be included in the participation rate.

The participation rate is an important metric to use when analyzing unemployment data because it reflects the number of people who are interested in participating in the workforce. These people are either looking for employment or are employed, and are at or above the working age of 16. People not included in the participation rate include those who do not want to work or can't work. This includes students, homemakers, incarcerated people and retirees.

From 2006 to 2018, the U.S. civilian labor force participation rate has hovered in the 62 to 67 range, with a fairly consistent decrease in the participation rate since 2009. The decline in the participation rate has been attributed to structural changes and not the overall health of the economy. This structural change in the number of people actively seeking work has occurred due to retiring baby boomers, a decline in working women, and more people deciding to attend college.

According to the World Bank, the global labor participation rate is at 61.7%, and has been on a steady decline since 1990. The countries with the highest labor force participation rates as of the end of 2018 include Zimbabwe, Rwanda, Tanzania and Cambodia. The countries with the lowest include Samoa, Timor-Leste and The Republic of Yemen.