Question

How do you calculate the unemployment rate? How do you calculate the labor force participation rate?

Short answer

$$\begin{gathered} Unemploymentrate=\frac{Unemployedpersons}{Totallaborforce} \\ Laborforceparticipationrate=\frac{Totallaborforce}{Totaladultpopulation} \end{gathered}$$

Step-by-step solution

Step.1 Introduction

Unemployment can be defined as the situation when a person who is able to work and is work, is also actively looking for jobs but is not able to find one. The percentage of working population that cannot find work is known as unemployment rate.

Step.2 Unemployment rate calculation

The unemployment rate can be obtained by the ratio of total number of unemployed workers and total labor force.

For instance, if the total labor force consists of 180 persons and out of that 15 people are unemployed then,

$$\begin{gathered} Unemmploymentrate \\ =\frac{Unemployedpersons}{Totallaborforce}\times 100 \\ =\frac{15}{180}\times 100 \\ =8.33\% \end{gathered}$$

Step 3. Labor force participation rate calculation

The labor force participation rate can be obtained by the ratio of total labor force and total working population.

Suppose, the total adult population is 240 persons, but the labor force consists of 180 persons then

$$\begin{gathered} Laborforceparticipationrate \\ =\frac{totallaborforce}{totaladultpopulation}\times 100 \\ =\frac{180}{240}\times 100 \\ =75\% \end{gathered}$$