Question

Use the following information to answer questions 4-5. The nation of Behrendonia has conducted an employment survey of its citizens. Below is the result of the survey. It should be noted that each person belongs to exactly one group. Total citizens: 80 million Children: 10 million Employed, full-time: 40 million Employed, part-time (but are happy with part-time work): 6 million Employed, part-time (but want full-time work): 3 million People without work, want to work, and are actively seeking employment: 7 million People without work, want to work, but have given up seeking employment: 2 million Retired citizens: 12 million 4. Calculate the labor force participation rate and unemployment rate for this economy S. Suppose that 3 million more people, who did not have a job but wanted to work, stopped looking for work. Calculate the new unemployment rate.

Answer 1

Adult population = total citizens - children

= 80 m - 10 m = 70m

Labor force= employed full time + employed part time but are happy with part time + employed part time+people without work,who want to work and are actively seeking employment

= 40m+6m+3m+7m = 56m

Labor force participation = 56m/70m = 0.8*100 = 80%

Umemployment rate = No of unemployed workers/labor force * 100

= 7m/56m * 100= 12.5%

People who are unemployed but are not looking for work are neither considered in labor force and nor in unemployed

Now 3m people who where unemployed stopped looking for work then

Labor force = 56m-3m = 53m

Unemployed = 7m-3m = 4m

Unemployed % = 4m/53m * 100 = 7.547%