What is the relationship between the labor participation rate and unemployment rate? How can the published unemployment rate actually be misleading vis-a-vis economic conditions?
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Relationship between participation and unemployment rates
The labor force participation rate can be defined as the ratio of individuals who are counted in the labor force to the total number of persons in the population who are willing to work. The unemployment rate on the other hand is defined as the ratio of individuals who cannot get jobs yet they are willing to work to the total labor force of a nation. These two aspects are directly related in that a fall in unemployment rate leads to a drop in the labor force participation …
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