Written by:
Image
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades.

Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

View all posts
Updated August 5, 2020

What is a Participation Rate?

Participation rate usually refers to the portion of the economy's working age population that is in the civilian labor market.

How Does a Participation Rate Work?

The participation rate measures the number of people who are in the labor force who are working, willing to work, or are actively looking for work.  It is the ratio between the active labor force and the overall size of the potential labor force (i.e. usually the population between the ages of 18 and 65).

Why Does a Participation Rate Matter?

The participation rate is an important measure of the civilian labor force.  It does not include those who are not interested in working at this specific moment in time.  The participation rate, therefore, is carefully watched by economists and investors as an indication of the direction of the economy.

The labor force participation rate explains how the unemployment rate can grow, even when new jobs are being created in an economy.  For example, if new workers are added to the labor force (increasing the participate rate), but are not able to find jobs, the unemployment rate grows.

Ask an Expert about Participation Rate
At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Participation Rate.
Be the first to ask a question

If you have a question about Participation Rate, then please ask Paul.

Ask a question

Read this next

Don't Know a Financial Term?
Search our library of 4,000+ terms
 - profile
Ask an Expert about Participation Rate

By submitting this form you agree with our Privacy Policy

Share
close