Labour force
Everyone of working age who is either employed or unemployed and actively looking for work. Someone who stops looking leaves it altogether rather than remaining unemployed.
Where you will meet it
Labour force appears in 5 learning outcomes on the CFA syllabus. A few of them:
- Read unemployment measures and say what they show
“The unemployment rate is the share of the labour force without work but actively seeking it, so it counts only those in the labour force.”
- Show how growth accounting can be used to forecast potential GDP
“Hours combine the labour force and average hours per worker, so falling hours per worker offset some labour force growth.”
- Explain how an assessment of trend economic growth feeds into long-run forecasts for asset returns
“Potential GDP growth equals labour force growth plus labour productivity growth, or in growth accounting terms %ΔY = %ΔA + α × %ΔK + (1 − α) × %ΔL.”
- Explain how immigration, demographics and labour force participation shape how fast and how sustainably an economy grows
“Combining population and participation, the labour force grows at g = (1 + working-age population growth) × (new participation rate ÷ old rate) − 1.”
Practise it
Practise labour force until it is automatic: questions that explain every wrong option.
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