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What is a Participation Rate?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 10 November 2016
  • Copyright Protected:
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    Conjecture Corporation
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A participation rate is a reflection of the percentage of people of working age who are either working or seeking work. These rates exclude people who do not want to work or who are prevented from working by circumstances such as immigration status or disability. The participation rate fluctuates over time and can be used to collect information about overall employment trends, as well as larger social trends. For example, the rate for women has been on the rise since the late 1940s, reflecting the fact that more and more women want to be in the workforce.

The most basic measure of participation rate simply looks at all people who are considered to be of working age. Classically, this includes people from ages 16 to 64. However, it can be more meaningful to break down the participation rate for specific demographics. Age, gender, and race can all be factors and examining the participation rate in different groups can provide useful and key information for people who want to learn more about social trends.

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One problem that often happens during periods of prolonged recession is that the participation rate drops, along with employment. Initially, people who become unemployed continue to look for work. Over time, they can become what are known as “discouraged workers,” people who no longer seek work because they think that it is not available. Recessions may also lead people to make lifestyle adjustments; for example, if one person in a two parent household loses a job, that person may decide to stay home and provide childcare, rather trying to stay in the workforce.

In order to collect information on the participation rate, statisticians need accurate population data, data from employers, and responses to surveys about employment and attitudes towards employment. Government agencies use rolling surveys to gather and update this information, keeping it as current as possible to generate meaningful statistics. Organizations interested in the participation rate can also run their own surveys, especially if they want to gather data for a specific population and they would like more control over the data collection process.

It can be important to examine this statistic when looking at employment trends. For example, if unemployment is holding steady in a country, this may not be because the number of employed people is remaining constant. It could be the result of a drop in participation rate, combined with a rise in unemployment that has the net effect of suggesting that the same number of people who want to be employed are able to find work.

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