BROWSE

Participation Rate

Definition

The workforce or labour force is the labour pool in employment. It is generally used to describe those working for a single company or industry, but can also apply to a geographic region like a city, state, or country. Within a company, its value can be labelled as its "Workforce in Place". The workforce of a country includes both the employed and the unemployed. The labour force participation rate, LFPR, is the ratio between the labour force and the overall size of their cohort. The term generally excludes the employers or management, and can imply those involved in manual labour. It may also mean all those who are available for work.

What is the 'Participation Rate'

The participation rate is a measure of the active portion of an economy's labor force. 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.

Explaining 'Participation Rate'

Significance

It is necessary to analyze the participation rate in conjunction with the unemployment rate because people classified as unemployed according to the unemployment rate might not be active participants of the work force. When looking at the unemployment rate alone, the interpretation can be made that a higher number of people are not earning income, and are therefore not active contributors to the economy. However, these people may not be working due to choice and therefore could still be active contributors to the economy. They could be either retirees spending their savings, or students increasing their skills and their future income potential. The participation rate and unemployment data should be observed in tandem to better understand an economy's overall employment status.

Structural Changes to Participation Rate

From 2006 to 2016, 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 amount of people actively seeking work has occured due to retiring baby boomers, a decline in working women, and more people deciding to attend college.


Further Reading


Explanations for the Low Participation Rate in the Formal Credit Market by Rural Households in the Poor Areas [J]
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-JJYJ200904012.htm'>PDF]
… We found (1) the low households participation rate in the formal credit market can be attributed to the factors from both the … Needs of Farmers:Based on the Improvement of Rural Mutual Financial Cooperative[J];The Theory and Practice of Finance and Economics;2008-03 …

Stock Market Participation, Participation Rate and Determinants <span style=[J]' src='/thumbnails/?img=https%3A%2F%2Fen.cnki.com.cn%2FArticle_en%2FCJFDTotal-JJYJ201210010.htm' />Stock Market Participation, Participation Rate and Determinants [J]
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-JJYJ201210010.htm'>PDF]
… We found (1) the low households participation rate in the formal credit market can be attributed to the factors from both the … Needs of Farmers:Based on the Improvement of Rural Mutual Financial Cooperative[J];The Theory and Practice of Finance and Economics;2008-03 …

The recent decline in the labor force participation rate and its implications for potential labor supplyThe recent decline in the labor force participation rate and its implications for potential labor supply
muse.jhu.edu [PDF]
… We found (1) the low households participation rate in the formal credit market can be attributed to the factors from both the … Needs of Farmers:Based on the Improvement of Rural Mutual Financial Cooperative[J];The Theory and Practice of Finance and Economics;2008-03 …

Financial literacy and pension plan participation in ItalyFinancial literacy and pension plan participation in Italy
papers.ssrn.com [PDF]
… We found (1) the low households participation rate in the formal credit market can be attributed to the factors from both the … Needs of Farmers:Based on the Improvement of Rural Mutual Financial Cooperative[J];The Theory and Practice of Finance and Economics;2008-03 …

On Chinas Labor Force Participation Rate During the Economic Transition Period <span style=[J]' src='/thumbnails/?img=http%3A%2F%2Fen.cnki.com.cn%2FArticle_en%2FCJFDTotal-BUSI200605026.htm' />On Chinas Labor Force Participation Rate During the Economic Transition Period [J]
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-BUSI200605026.htm'>PDF]
… We found (1) the low households participation rate in the formal credit market can be attributed to the factors from both the … Needs of Farmers:Based on the Improvement of Rural Mutual Financial Cooperative[J];The Theory and Practice of Finance and Economics;2008-03 …

Beyond the square root: Evidence for logarithmic dependence of market impact on size and participation rateBeyond the square root: Evidence for logarithmic dependence of market impact on size and participation rate
www.worldscientific.com [PDF]
… We found (1) the low households participation rate in the formal credit market can be attributed to the factors from both the … Needs of Farmers:Based on the Improvement of Rural Mutual Financial Cooperative[J];The Theory and Practice of Finance and Economics;2008-03 …

Explaining the decline in the US labor force participation rateExplaining the decline in the US labor force participation rate
www.questia.com [PDF]
… We found (1) the low households participation rate in the formal credit market can be attributed to the factors from both the … Needs of Farmers:Based on the Improvement of Rural Mutual Financial Cooperative[J];The Theory and Practice of Finance and Economics;2008-03 …

The Response of the Labor Force Participation Rate to an Epidemic: Evidence from a Cross-Country AnalysisThe Response of the Labor Force Participation Rate to an Epidemic: Evidence from a Cross-Country Analysis
www.tandfonline.com [PDF]
… We found (1) the low households participation rate in the formal credit market can be attributed to the factors from both the … Needs of Farmers:Based on the Improvement of Rural Mutual Financial Cooperative[J];The Theory and Practice of Finance and Economics;2008-03 …

Unemployment and labour force participation in JapanUnemployment and labour force participation in Japan
www.tandfonline.com [PDF]
… We found (1) the low households participation rate in the formal credit market can be attributed to the factors from both the … Needs of Farmers:Based on the Improvement of Rural Mutual Financial Cooperative[J];The Theory and Practice of Finance and Economics;2008-03 …



Q&A About Participation Rate


How does the participation rate relate to unemployment?

The participation rate and unemployment data should be observed in tandem to better understand an economy's overall employment status.

How has labor force participation changed since 2000?

Labor Force Participation declined steadily since 2000 primarily because of aging population and retirement of Baby Boom generation (1946–1964). Analyzing trends in prime working age cohort helps separate impact of aging population from other demographic factors such as gender, race, and education level (25-54 years old).

From what range has the U.S. civilian labor force participation rate hovered since 26?

62-67 range, with a fairly consistent decrease in the participation rate since 29.

What is the participation rate?

The participation rate is a measure of the active portion of an economy's labor force. It refers to the number of people who are either employed or are actively looking for work.

How does the U.S. labor force compare to other countries?

The U.S. labor force has risen each year since 1960, with the exception of the period following the Great Recession when it remained below 28 levels from 2008-2012.

What is the labor force?

The labor force is the actual number of people available for work.

What has been attributed to structural changes in the amount of people actively seeking work?

A decline in working women, and more people deciding to attend college.

What are some factors that affect LFPR?

Factors affecting LFPR include unemployment rates, wages, taxes, disability status, child care costs and availability etc...

Why did participation in the U.S. increase significantly during later half of 20th century?

Women entering workforce in increasing numbers and Baby Boomers reaching prime working age contributed to this rise in participation rate during this time period (196-2).