- I'm reading that WPR in the USSR was much higher at around 80%. So is a higher WPR a good thing or a bad thing?
- Why isn't the WPR not ever cited when describing the economic health of a nation, but the unemployment rate is?
- What scenario is "better": A society with a WPR of 60% and an official unemployment rate of 4.5%, or a society with a WPR of 80% and an official unemployment rate of with a 28.4%? In both cases, the total number of unemployed people are the same:
60% WPR * (1-4.5%) ~= 80% WPR * (1-28.4%)
Do the following people count towards the WPR?
- sex workers and other grey economy participants?
- people living off of dividends and interests (i.e. super wealthy people)?
- landlords?
Also, do all nations measure this metric the same way using the same age ranges?
Should society aspire to have a higher workforce participation rate (WPR)?
byu/No-Silver826 inAskEconomics
Posted by No-Silver826
2 Comments
high labor force participation is generally a good thing, however, you have to be careful when you compare countries. the number you cite at the top is usually something like “percent of people aged 16+ who are employed”. the issue is that this number will be lower as countries age because old people don’t work (nor would we want them to), and there’s a similar story for people going to college. instead, the number you generally want is “prime aged labor force participation”, which is usually something like % of people aged 25-54 who are employed.
– https://fred.stlouisfed.org/series/LNS11300060
Your “average” labor force participation tends to be largely down to factors like demographics and laws that might or might not be a negative.
For instance, large parts of the decline in the LFP in the US over the last decades was down to a greater portion of the population being in retirement and more young people going to college. Neither of these things are necessarily bad or worth changing at all.
Sometimes, policy changes can raise LFP significantly and can be very good, like how many countries granted women much greater freedom about if and where they work and what education they could attain.
Other laws could lower LFP and not necessarily be “bad”, like granting parents more freedom to take off of work after having a child, or a stronger welfare system where someone chronically disabled gets enough assistance that they don’t have to work to get by.
Of course the LFP can still fluctuate in the short term as well, although usually not as much. This usually happens for very similar reasons as fluctuations in unemployment.
So it’s not really a matter of “high good low bad”, it depends on what drives a high or low LFP.