Question

Assume that in an economy with 200M population in working age, 80M work, 10M are looking for a job, 20M are discouraged workers, and 26M are marginally attached workers. Calculate the following: What is the Labor participation rate? What is the unemployment rate? What is the unemployment rate if considering the marginally attached? What is the unemployment rate if considering the discouraged workers?

Answer 1

The labor force participation rate is 45%, the unemployment rate is 11.1%, the unemployment rate considering marginally attached workers is 9.1%, and the unemployment rate considering discouraged workers is 8%.

Step-by-step explanation:

The labor force participation rate is the percentage of adults in an economy who are either employed or who are unemployed and looking for a job. To calculate the labor force participation rate, we need to divide the number of people in the labor force (employed + unemployed) by the total adult population, and multiply by 100. In this case, the labor force participation rate would be:

Labor force participation rate = (80M + 10M) / 200M * 100 = 45%.

The unemployment rate is the percentage of individuals in the labor force who are unable to find a job. To calculate the unemployment rate, we need to divide the number of unemployed individuals by the labor force population, and multiply by 100. In this case, the unemployment rate would be:

Unemployment rate = 10M / (80M + 10M) * 100 = 11.1%.

If we consider the marginally attached workers as well, the labor force population would be (employed + unemployed + marginally attached). To calculate the unemployment rate in this case, we need to divide the number of unemployed individuals by the labor force population, and multiply by 100. In this case, the unemployment rate would be:

Unemployment rate (considering marginally attached) = 10M / (80M + 10M + 26M) * 100 = 9.1%.

If we consider the discouraged workers as well, the labor force population would be (employed + unemployed + discouraged). To calculate the unemployment rate in this case, we need to divide the number of unemployed individuals by the labor force population, and multiply by 100. In this case, the unemployment rate would be:

Unemployment rate (considering discouraged workers) = 10M / (80M + 10M + 20M) * 100 = 8%.

A pie chart representing the adult population divided into the employed, unemployed, and out of labor force categories would show the employed population as the largest share, followed by the unemployed population, and the out of labor force population as the smallest share.