Participation Rate

AAA

DEFINITION of 'Participation Rate'

A measure of the active portion of an economy's labor force. The participation rate refers to the number of people who are either employed or are actively looking for work. The number of people who are no longer actively searching for work would not be included in the participation rate. During an economic recession, many workers often get discouraged and stop looking for employment, as a result, the participation rate decreases.

INVESTOPEDIA EXPLAINS 'Participation Rate'

The participation rate is an important metric to note when looking at unemployment data because unemployment figures reflect the number of people who are looking for jobs but are unable to secure employment.


The participation rate is important in analyzing the unemployment rate. Those who have no interest in working are not included in the participation rate but are included in the unemployment rate. An aging population can have both a positive and negative effect on the participation rate, through retirement and new people entering the workforce. The participation rate and unemployment data should be observed in tandem to give a better understanding of the overall employment status.

RELATED TERMS
  1. Discount Rate

    The interest rate charged to commercial banks and other depository ...
  2. Structural Unemployment

    A longer-lasting form of unemployment caused by fundamental shifts ...
  3. Cyclical Unemployment

    A factor of overall unemployment that relates to the cyclical ...
  4. Frictional Unemployment

    Unemployment that is always present in the economy, resulting ...
  5. Natural Unemployment

    The lowest rate of unemployment that an economy can sustain over ...
  6. Full Employment

    A situation in which all available labor resources are being ...
Related Articles
  1. How does the Bureau of Labor Statistics ...
    Economics

    How does the Bureau of Labor Statistics ...

  2. What Is Fiscal Policy?
    Economics

    What Is Fiscal Policy?

  3. What You Need To Know About The Employment ...
    Economics

    What You Need To Know About The Employment ...

  4. Explaining The World Through Macroeconomic ...
    Options & Futures

    Explaining The World Through Macroeconomic ...

comments powered by Disqus
Hot Definitions
  1. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  2. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  3. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  4. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  5. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  6. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
Trading Center