Question

1. Compute the unemployment rate in each year. U-rate in Year 1 =100 x (7.2 / 120) = 6% U-rate in Year 2 = 100 x (6.7/119.5) = 5.6% 2. Compute the number of people employed in each year. People employed in Year 1 = 120 -7.2 = 112.8 million people employed in Year 2 = 119.5 - 6.7 = 112.8 million 3. Compute the labor force participation rate in each year. Labor force participation rate in Year 1 = 100 X (120/200) = 60% Labor force participation rate in Year 2 = 100 X (119.5/200)= 59.75% 4. Explain the changes from year 1 to year 2. According to calculations, we can see that the unemployment rate from year 1 to year 2 dropped by 0.4%, and the labor participation rate dropped by 0.25%. Besides, although the labor force of Year 2 is reduced by 500,000 people compared with Year 1, the people employed numbers are the same.

I need response to this question

Answer 1

The drop in labor force participation rate will help us answer this question. This trend in participation indeed suggests us that the adults are increasingly opting out of searching for jobs due to discouragement or the significant proportion of the population has retired from the labor force. As these people are not counted under the unemployment rate, we can observe the unemployment rate falling due to the trend in labor force participation rate and not explicitly people getting encouraged.

Hope this helps. Cheers!