Labor Force Participation Rate

The participation rate shows how much of the population is engaged in the labor market. It is calculated by dividing the labor force, the employed plus the unemployed, by the working-age population.

For example, if a country has 80 million people of working age and 50 million of them are either working or looking for work, the participation rate is 62.5%.

The participation rate is influenced by many factors, including the age structure of the population, education levels, retirement patterns, childcare availability, social norms and economic conditions. An ageing population tends to reduce participation as more people retire.

The participation rate helps interpret the unemployment rate. Unemployment can fall because people find jobs, which is good news, or because discouraged job seekers give up looking and leave the labor force, which is not. Looking at participation alongside unemployment gives a fuller picture of labor market health.