Question

10. Measuring employment, unemployment, and tabor force participation

Consider a small economy composed of six people: Raphael, Susan, Alex, Becky, Eileen, and Clancy. Each person's employment status is described in the following table.

Based on the criteria used by the Bureau of Labor Statistics (BLS), identify each person's status as employed, unemployed, "not in the tabor force" (if not in the civilian labor force but still part of the adult population), or "not in the adult population" if not in the civilian adult population.

Complete the right half of the following equation to reflect the labor force participation rate reported by the BLS.

Labor Force Participation Rate =

According to this formula, what is the labor force participation rate of this economy of six people?

• 40 %

• 50 %

• 80 %

• 100 %

According to this formula, what is the unemployment rate of this economy of six people?

• 40 %

• 50 %

• 80 %

• 100 %

Answer 1

(1)

Raphael - Employed

Susan - Unemployed

Alex - Not in labor force

Eileen - Unemployed

Clancy - Employed

Becky - Not in adult population

(2)

Labor force participation rate = 100 x (Number in labor force / Adult population)

= 100 x (4/5) = 80%

(3)

Unemployment rate = 100 x (Number of unemployed workers / labor force)

= 100 x (2/4) = 50%