Participation Rate is the percentage of the total number of labor-force age people (16 years and older) who are either employed or are actively seeking employment, in relation to the total population in the corresponding age group.
The indicator is considered a metric of the active part of the nation's entire labor force. For example, many individuals may get discouraged in economic recession conditions and stop seeking employment. Thus such individuals are excluded from the economically active population. Statistics confirm this logic: during recession, the share of economically active population is noticeably reduced. Also, the economically active population does not include students, housewives, prisoners and pensioners.
The indicator is usually analyzed along with unemployment rate, because people categorized as unemployed may not be active labor market participants. On the other hand, unemployed people may have income and participate in economic processes. This category may include pensioners who spend their savings, or students trying to gain experience to enter the labor market later.
The proportion of economically active population may be reduced due to structural social changes, not only the overall economic health. For example, the increase in the birth rate leads to a decrease in the number of working women.
Parallel interpretation of the share of economically active population and the unemployment rate provides for a better understanding of general employment trends in the economy.
The chart of the entire available history of the "United States Participation Rate" macroeconomic indicator. The dashed line shows the forecast values of the economic indicator for the specified dates.
A significant deviation of a real value from a forecast one may cause a short-term strengthening or weakening of a national currency in the Forex market. The threshold values of the indicators signaling the approach of the critical state of the national (local) economy occupy a special place.
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