Question

3. In January 2020, the labor force participation rate for those 25 years and over with less than a high school diploma was only 45.9%. This implies that their proportion not in the labor force was approximately 54%. At the same time, this group's unemployment rate was 5.5%. Discuss how you think the issue of discouraged workers could be reflected in these official labor statistics for this group. [2 points)

Answer 1

Discouraged workers are not considered unemployed. this is because they are not looking for work and one of the most important condition for being unemployed is to continue to look for work. Due to this reason they are also not a part of the labour force. If discouraged workers are also included in labour force, then it implies that labour force will increase in size and labour force participation rate will increase

Because discourage workers will now be considered as unemployed, the number of people unemployed as well as the size of the labour force, both will increase. As a result the rate of unemployment will increase.