Chapter 8, Problem 1SCQ

Suppose the adult population over the age of $\text{16}$ is $\text{237}.\text{8}$ million and the labor force is $\text{153}.\text{9}$ million (of whom $\text{139}.\text{1}$ million are employed). How many people are “not in the labor force?” What are the proportions of employed, unemployed and nut in the labor force in the population? Hint: Proportions ate percentages.

To determine

The number of people not in the labor force and the proportions of employed, unemployed and not in the labor force.

Answer to Problem 1SCQ

Thenumber of people not in the labor forceis 83.9mn.

The proportion of people employed is 90.38%.

The proportion of people unemployed is 9.61%.

The proportion of people not in the labor force is 35.28%.

Explanation of Solution

Not in the labor force: It refers to those who are either not willing or able to work. It is calculated by subtracting the number of people in the labor force from the total adult population (over the age of 16).

Given Information:

Total Adult population (>16 years), say, N = 237.8mn

Labor force (L) = 153.9mn

Employed (E) = 139.1mn

Calculation:

Calculating the number of people not in the labor force by using the formula below:

$\begin{array}{l}Peoplenotinlaborforce=Totaladultpopulation-Laborforce\\ =237.8mn-153.9mn\\ =83.9mn\end{array}$

Thus, the number of people not in the labor force = 83.9mn.

Proportion/ Percentage of Employed: It refers to the proportion of those people who belong to the labor force and are working to those who are in the labor force.

Given Information:

Total Adult population (>16 years), say, N = 237.8mn

Labor force (L) = 153.9mn

Employed (E) = 139.1mn

Calculation:

Using the formula below, we calculate the percentage of people employed.

$\begin{array}{l}PercentageEmployed=\frac{Employed}{LaborForce}\times 100\\ =\frac{E}{L}\times 100\\ =\frac{139.1}{153.9}\times 100\\ =0.9038\times 100\\ =90.38\%\end{array}$

Thus, the percentage of people employed is 90.38%.

Proportion/ Percentage of Unemployed: It is the proportion of number of people who belong to the labor force but do not possess job to the number of people who belong to the labor force.

Given Information:

Total Adult population (>16 years), say, N = 237.8mn

Labor force (L) = 153.9mn

Employed (E) = 139.1mn

Calculation:

First, we calculate the number of people unemployed as follows:

$\begin{array}{l}Unemployed(U)=LaborForce-Employed\\ =L-E\\ =153.9mn-139.1mn\\ =14.8mn\end{array}$

Now, we calculate the percentage of people unemployed as follows:

$\begin{array}{l}PercentageUnemployed=\frac{Unemployed}{Laborforce}\times 100\\ =\frac{U}{L}\times 100\\ =\frac{14.8}{153.9}\times 100\\ =0.0961\times 100\\ =9.61\%\end{array}$

Thus, the percentage of people unemployed is 9.61%.

Proportion/ Percentage of Not in labor force: It is the proportion of those who are either not willing or not able to work to total adult population.

Given Information:

Total Adult population (>16 years), say, N = 237.8mn

Labor force (L) = 153.9mn

Employed (E) = 139.1mn

Also, above we have calculated the number of people who are not in labor force as 83.9mn.

Calculation:

Now, we calculate the percentage of people not in the labor force as follows:

$\begin{array}{l}Percentageofpeoplenotinlaborforce=\frac{Peoplenotinlaborforce}{Totaladultpopulation}\times 100\\ =\frac{83.9}{237.8}\times 100\\ =0.3528\times 100\\ =35.28\%\end{array}$

Thus, the percentage of people not in the labor force is 35.28%.

Economics Concept Introduction

Labor force: In an economy, labor force refers to the part of the working age population (aged 15-69) that is willing and able to work. It is the sum of employed and unemployed people.

Not in the labor force: In an economy, the people who are either not able to work or not willing to work are said to be ‘out of the labor force’ or ‘not in the labor force’. Such people may either be retired (not in the working age population), children (below 15 years of age), students who belong to working age but currently not working, people on parental leave or maternity break, those who have taken voluntary break from work, those who have voluntarily taken premature retirement, etc.

Employed: Those people who belong to the labor force and are working belong to the employed category.

Unemployed: This includes the people who are willing and able to work but do not possess job.