The labor force includes people of working age who are employed or seeking work, but excludes those below working age or above retirement age. Unemployment and labor force participation rate are important concepts used by economists to analyze trends and changes in the workforce. The size of the workforce depends on economic conditions.
In economics, in particular labor economics, the labor force is generally defined as people of working age who, whether employed or unemployed, are working or looking for work. Generally, people below working age or above retirement age are not considered part of the labor force. In most places, the working age begins between 14 and 16, while the retirement age tends towards around 65. Full-time students, the military, the long-term sick and disabled, and those with unreported incomes are also not included in the force.
An important concept related to the workforce is unemployment. One is considered unemployed if he or she currently has no job but is willing and available to work. The unemployed, therefore, are considered part of the labor force despite not actually producing any work. On the other hand, those who want jobs but have stopped actively seeking them due to discouragement or other factors are not considered part of the force. A high unemployment rate is generally a bad thing as it means there are plenty of people who want to work but not enough jobs to go around.
Another important concept used by economists is the labor force participation rate, which is a ratio of the size of the labor force to the total population of people of working age in a given area. It is used to analyze trends and changes in the workforce. The participation rate has risen sharply, for example, as women have started working in greater numbers. Previously, they were of working age but not functioning, so the participation rate was much lower. The participation rate also describes the effects of a large influx of workers on the workforce; if there aren’t enough jobs available, total employment and total unemployment can both rise.
The size of the workforce depends largely on economic conditions at any given time. When an economy is functioning smoothly and productively, the force should be large and only a small fraction of the individuals in the force should be unemployed. In general, in a good economy, job seekers can find them and people are unlikely to become discouraged and leave the workforce. On the other hand, when an economy is not doing well or is in a state of crisis, the strength will likely wane as the unemployment rate rises and people become discouraged.
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