The calculation of the employment-population ratio is illustrated using this equation:

employment-population ratio

=

employed persons total noninstitutionalized civilian population

x 100

Suppose that the total noninstitutionalized civilian population is 206,000 people and the number of employed persons is 133,000. The employment-population ratio is calculated as:

employment-population ratio

=

133,000 206,000

x 100

=

64.6%

The employment-population ratio is closely associated with the labor force participation rate. The labor force participation rate is the ratio of the sum of both employed and unemployed to the total noninstitutionalized civilian population. The employment-population ratio is simply the ratio of employed persons to the total noninstitutionalized civilian population.

The connection between the employment-population ratio and labor force participation rate is also noted by the general upward trend in the employment-population ratio. In the late 1940s, the employment-population ratio was in the mid-50 percent range. By the late 1990s, this rate had gradually risen to the mid-60 percent range. Much of this increase can be attributed to the increased participation of women in the labor force, which resulted from a change in the traditional role of women as housewives, stay-at-home mothers, and homemakers. The end result is that the economy has found employment for a larger fraction of the population, resulting in an increase in total production.