Wednesday, March 9, 2011

An Interesting Difference with the US

One of the more interesting statistics I have kept up with over the last few years concerns the labor participation rate for our state. Specifically, this is referred to as the labor force participation rate, defined as the percentage of the working-age population that is in the labor force. Over the past few years, Rhode Island's labor force participation rate has taken on an interesting behavior relative to that of the US. The chart shows this (click to enlarge).

Nationally, there is both concern and more than a little bit of confusion concerning how this rate has been changing. It should be apparent from the graph that nationally, the labor force participation rate has continued to decline for some time now, falling to a level of around 64 percent (0.64) in February of this year. There was an excellent discussion of this on CNBC this morning, going into far more detail that I will engage in here.

At this point, the more interesting question in this state is why the participation rate for Rhode Island rose during 2009 while the US rate was declining and the reason why our state's participation rate has largely remained unchanged at very high values. While there are in reality a number of factors responsible for this, I'll give you a hint concerning why RI is so different: 99. See if you can figure out this "puzzle."

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