Define ‘the labour force participation rate’. What factors determine the labour force participation rate?

Question

Define ‘the labour force participation rate’. What factors determine the labour force participation rate?

b)Outline recent trends in the labour force participation of older workers and of immigrants

c) Explain the impact of these trends on the amount of employment and the real wage.

Answer 1

The labor force participation rate is the percentage of working-age persons in an economy who:

a) Are employed  

b) Are unemployed but looking for a job.

Typically "working-age persons" is defined as people between the ages of 16-64. People in those age groups who are not counted as participating in the labor force are typically students, homemakers, and persons under the age of 64 who are retired. In the United States the labor force participation rate is usually around 67-68%.

As the U.S. population ages, a greater fraction of older workers remain in the labor force. These older workers and immigrant workers depress the real wage for the people they are competing with.