Labor Force Participation

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An economy is divided into both the demand and the supply sides. The Monetary and Financial theory of economics explicitly discusses the two sides of the economy. From the supply side, is the labor market which is an interactive place for employers and employees. The employers struggle to employ the best workers as workers compete for the jobs that offer them maximum wages. In an economy, the labor market operates with both the supply and demand sides.

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According to the monetary and financial theory, the supply and demand changes in the labor market rely on the power to bargain and the rate of participation in the workforce. The labor force participation rate refers to the percentage of a population that is above 15 years of age and actively participates in the economy by supplying labor for the creation of goods and services within a specified period (Bowen, & Finegan, 2015). It can also be described as the number of individuals who are either in employment or are ready and willing to work at the prevailing wage rate. The rate is calculated by dividing the labor force by the number of the adult population. The monetary and financial theory of economics outlines the key players in the labor market and the factors that cause changes in this market as well as the rate of participation (Bullard, 2014).

An economist known as Shigeru Fujita conducted a survey, (the November 19 Research Rap by Shigeru Fujita) that was aimed at identifying the possible causes of a decline in the labor force participation rate (Fujita, 2014). His research was motivated by an observation on the rising rates of retirement that caused the decline. According to his statistics, one of the leading causes of the reduction in the LFPR is the declining rate of participation by workers who are between 25 -52 years since these are the workers who comprise half of the working population. The proportion of workers who are 65 age and above continues to rise sharply over the last half-decade (Bowen, & Finegan, 2015).

According to a report issued by five American economists namely; Steven Braun, John Coglianese, Jason Furman, Betsey Stevenson and Jim Stock on 18 August 2014 called understanding the decline in the LFPR, they noted that the rate has substantially declined since 2007 in the US. They cited three main possible causes of this decline (Bullard, 2014). The natural cyclical change from boom to recession was one of the outlined causes. They said that the labor market was recovering from the great recession. Retirement and Aging factors were the second-mentioned cause of this decline in the Labor force participation rate. They also pointed that other unrelated factors could have caused the decline but they believed that the aging factor was the key reason. In the United States, the LFPR has declined from 65.9% in the fourth quarter of 2007 all the way to 62.8% in the second quarter of 2104, indicating a 3.1% decline (Bullard, 2014).

From a study done by the Congressional Budget Office in 2014, the declining rate of labor force participation between 2007 and 2013 was caused by three primary factors. One of the three factors was the presence of a short-term deficiency in employment expectations and wages. The second factor was the shifts in the aging population and lastly other factors such caused by the slow trend of the labor market especially the low rates of hiring.

The word of God may affect the decisions that one makes concerning their career and work. Christians apply the Bible and other Christian faith resources in deciding what work is good or bad, determining the right ethics at the workplace and incorporating Christian values into their work. Since the scripture says that our work is God's work, Christians should be keen and observe principles that are in line with their Faith in their job.


Bowen, W. G., & Finegan, T. A. (2015). The economics of labor force participation. Princeton University Press.

Bullard, J. (2014). The rise and fall of labor force participation in the United States. Federal Reserve Bank of St. Louis Review, 96(1), 1-12.

Fujita, S. (2014). On the causes of declines in the labor force participation rate. Research Rap Special Report, Federal Reserve Bank of Philadelphia.

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