What does the labor force participation rate measure?

The labor force participation rate is a key economic indicator that reflects the proportion of the working-age population that is actively engaged in the labor market, either by working or actively seeking work. This metric provides insight into the active portion of the population that is contributing to, or seeking to contribute to, economic productivity.

A high labor force participation rate suggests that a larger share of the population is either employed or seeking employment, indicating strong economic conditions. Conversely, a low rate may highlight issues such as economic stagnation, demographic shifts, or barriers to employment. This measure is distinct from the total number of employed individuals or the number of unemployed, as it encompasses both those who have jobs and those who are searching for work, thereby giving a fuller picture of workforce engagement.