Question

Homemakers are not included in the employment or labor force totals compiled by the Bureau of Labor Statistics household survey. They are included in the working-age population totals. Suppose that homemakers were counted as employed and included in the labor force statistics. How would that change affect the following: (a) labor force; (b) labor force participation rate; (c) unemployment rate, and (d) the employment-population ratio?

Answer 1

A) Labor force = Employed + Unemployed

If housemakers are included as employed, this would increase the labor force

B) LF participation rate = Labor force/Working age population

With housemakers being included as employed, this will increase labor force and hence labor force participation rate

C) Unemployment rate = Unemployed/Labor force

Unemployment rate would fall, as number of unemployed remains same while labor force increases

D) Employment population ratio would increase because the number of employed would increase while population remains unchanged