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Labor force
From Wikipedia, the free encyclopedia
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In economics the people in the labor force are the suppliers of labor. In 2005, the worldwide labor force was over 3 billion people.[1]
Normally, the labor force consists of everyone of working age (typically above a certain age (around 14 to 16) and below retirement (around 65) who are participating workers, that is people actively |employed]] or looking for work. Child labor laws in the United States forbid employing people under 18 in hazardous jobs.
The fraction of the labor force that is seeking work but cannot find it determines the unemployment rate.
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Source: United States Bureau of Labor Statistics
The labor force participation rate is the ratio between the labor force and the overall size of their cohort (national population of the same age range). In the West during the latter half of the 20th century, the labor force participation rate increased significantly, largely due to the increasing number of women entering the workplace. In the United States, the labor force participation rate rose from approximately 59% in 1948 to 66% in 2005[3], with participation among women rising from 32% to 59%[4] and participation among men declining from 87% to 73%[2][5]. Conversely, the labor force participation rate can decrease when the rate of growth of the population outweighs that of the employed and unemployed together. The labor force participation rate is a key component in long term economic growth, almost as important as productivity.
Pop = total population
LF = labor force = U + E
LFpop = labor force population
p = participation rate = LF / LFpop
E = number employed
e = rate of employment = E / LF
U = number of unemployed
u = rate of unemployment = U / LF
The labor force participation rate explains how an increase in the unemployment rate can occur simultaneously with an increase in employment. If a large amount of new workers enter the labor force but only a small fraction become employed, then the increase in the number of unemployed workers can outpace the growth in employment. [3]
- ^ US Central Intelligence Agency The World Factbook: Labor Force by Country. Accessed June 17, 2007.
- ^ Breaking down the male participation rate by age bracket shows a marked decline in participation among men 55 and over from approximately 71% in 1948 to 44% in 2005[1]. Among younger age groups a decline is noticeable, but not nearly as drastic.[2]
- ^ Peter Barth and Dennis Heffley "Taking Apart Taking Part: Local Labor Force Participation Rates" University of Connecticut, 2004.