Question

How do you calculate labour market ratios (i.e unemployment rate) from raw data?

Answer 1

Each labor market ratio has different numerators and denominators. So, first the numerators and then denominators are calculated from the raw data. Once, these values are calculated, then these values are put into the formula and ratios are calculated.

For example, for calculation of labor force participation rate,

The value of working age population is calculated from the data. Here, age is a critical factor that is considered in calculating the actual number of working age population. Afterwards the number of employed people as well as unemployed people as per the definitions of the BLS is identified. Sum of unemployed and employed people will be used to build a labor force.

Now,

Labor force participation rate = Labor force / working age population

In the same way, other ratios such as unemployment rate will be calculated.