Consider the following: Labor force: 30 Employed: 25 a. Calculate the unemployme
ID: 1106778 • Letter: C
Question
Consider the following:
Labor force: 30
Employed: 25
a. Calculate the unemployment rate.
b. Suppose 3 individuals enter/reenter the labor force; 1 of these individuals has a job immediately upon entering, while 2 of them are unemployed. What happens to the unemployment rate relative to part a? Support your response.
c. Ignore part b. Suppose 2 of the unemployed individuals become discouraged and exit the labor force. What happens to the unemployment rate? Support your response.
d. Ignore parts b and c. Suppose 10 of the employed workers only work 20 hours a week because that is all the employment they can find. The remaining 15 employed workers work a standard 40 hours a week. Following our in class discussion of how the unemployment rate from part a can be adjusted to better reflect the problem of counting part time workers as fully employed, identify the calculation you would perform to determine the adjusted unemployment rate.
Explanation / Answer
Labor force = Employed + Unemployed
a) Unemployment rate = Unemployed / Labor force x 100 = (30 - 25)/30 x 100 = 5/30 x 100 = 16.67
b) Unemployment rate = (5 + 2)/(30 + 3) x 100 = 7/33 x 100 = 21.21
c) Unemployment rate = (5 - 2) / (30 - 2) x 100 = 3/28 x 100 = 10.71