Hi. Welcome to Macroeconomics. This is Kate. This tutorial is called Labor Force Participation Rates By Gender. As always, key terms are in red, and examples are in green. So in this tutorial, simply we'll talk about what labor force participation rates by gender can tell us about the quality of life in a country.
Let's talk though about measuring employment data in general for a minute. What kinds of employment information do economists collect and study? Well throughout this course on macroeconomics, we've learned about a lot of it. Probably the most reported figure in the media, the one that most people listen for a lot, is the unemployment rate. So we know that our government collects information and publishes an unemployment rate.
We also know that there's employment data too. And that's published as job gains or losses by sector. But there's also something called the labor force participation rate. And that's what we're focusing on in this tutorial.
So let's remind ourselves a little bit about unemployment and employment. Unemployment is anybody who is 16 years or older who's not working, but is available for work, and is looking for a job. They've made efforts to find work during the last four weeks. So then when we calculate our unemployment rate, we take the number of people in a country who are unemployed and we divide not by the population, but we divide by our labor force. And our labor force is made up of all of the people who are working, but also all of the people who would like a job.
So like I said, here's what our labor force entails. So that means that there are people in our population just not in the labor force. People who aren't in the labor force are people who aren't looking for work, either because they don't want a job or they're not available for work, or they've given up looking. A couple of examples I gave you are anyone under the age of 16. So small children certainly aren't working, but they're also not considered unemployed. They're not in the labor force. Retirees can be in that same category if they're not looking for employment, and stay-at-home parents.
So then obviously our population is people, not people who are employed versus unemployed, but people who are not in the labor force and in the labor force. So when we look at it that way, we can then calculate a labor force participation rate. Really looking at what is the percentage of our population who's in the labor force. What percentage of people are working or would like to work? So what part of our population is actively either working or seeking work and being defined as able to do so?
So what kind of information does employment data tell us about an economy? Well first of all, starting with the unemployment and employment figures, we know that those can really give us an idea as to whether our economy is growing or contracting, whether we're in an expansionary period or a contractionary or recessionary period.
But labor force participation rates are a little bit different. These can help us to describe our population a little bit more than just unemployment and employment figures can. So these participation rates can tell us things about our demographics. For example, is there a significant portion of the population too old to work? Let's say that a significant portion of a country's population is over age 65 or 75, or whatever age you want to use.
But perhaps those people have decided that they're going to retire, or that they just don't want to work anymore. In those situations where countries have a lot of the population over that age, their labor force participation rates will be much lower than in countries where people are still active members of the labor force.
These participation rates can also tell us about people's attitudes that they have towards work. For example, do people want to work? Do they feel confident in their ability to find work when they want to? So remember that how we define people as being part of the labor force is their willingness to look for work, that they are able to work, but that they're also willing to seek it out.
So when people feel like, you know what. It's just not worth it anymore. I've looked and looked in looked and looked. We find that during very long recessions sometimes our labor force participation rates actually began to decline, because people give up hope and stop looking. So the labor force participation rates can tell us a little bit more about our population.
So probably the most commonly used indicator in macroeconomics that we've talked about is GDP, or Gross Domestic Product. And gross domestic product can indirectly capture a lot of ideas. It can certainly give us some indication about educational attainment in an economy, and labor force participation. Because countries with higher GDPs, on average, tend to have more productive and more educated workforces. And they also tend to have a more significant portion of their population who are in the labor force. Without those things, it would be very difficult to have a high GDP.
But if we study and look at labor force participation rates, they can give us a better idea as to the access or the availability of jobs for those people who are seeking them. They can give us a lot more insight into the economic well-being of a people, equality in an economy, birth rates, and standard of living or quality of life much more than GDP alone. And those things especially can be seen when we break down labor force participation rates by gender, by age, and by ethnicity. Especially when we look at it by gender, which is what we're going to do right now.
So we find that in countries that have higher participation rates by women, we find a higher standard of living for families. And we also find that it's much more typical for there to be lower birth rates, so families choosing not to have as many children. So let's think about what that means. If we now have families with two incomes, and making the decision to have fewer children, overall that's going to mean more resources for the children that families are having. And we also see a greater possibility then for the next generation to enjoy a higher standard of living.
I'm giving a couple examples as to why this might be the case. Keep in mind, this is obviously on average. So this is not the case in every situation. There are obviously still families having a lot of children, and families raised on one income. However, overall if this is the case, if there are more resources for children and families, maybe those families are able to afford better education, to afford the ability to go to a really good college.
Girls may be are seeing their mothers working, and want to do the same thing. So they then further themselves and want to get a really good education. Those are just a couple of examples as to how we can see this play out.
So this is one kind of final note. We are seeing that on a global level labor force participation rates by women are increasing in much of the world. And despite the fact that more women are part of the labor force, unfortunately, in most places in the world they're still responsible for most of the domestic work too. So women are really working many more hours if you account for this. However, some research is indicating that in the more developed regions, men are beginning to share in the domestic work, so taking some of that off of women in homes where women and the men are working.
So in this tutorial we just kind of briefly looked at how labor force participation rates, what they can tell us about quality of life in a country. Especially when we break it down and look at it by gender. Thank you so much for listening. Have a great day.
Labor Force Participation Rate
Percent of the population actively seeking work and defined as being able to do so.