Question

The economy of Seychelles has a population of 100000 people, of which 70000 are in the labor force. 30000 people work in the construction sector, 20000 people work in the services sector, 10000 people work in the IT sector, and 10000 people are unemployed.

i. State and explain two types of unemployment.
ii. ii. Assuming that the fraction of unemployed construction workers with respect to total number of unemployed people is the same as the fraction of employed construction workers with respect to the total population; and the fraction of unemployed service workers with respect to total number of unemployed people is the same as the fraction of employed service workers with respect to the total population, how many construction workers are unemployed? How many unemployed service workers?
iii. Calculate the unemployment rate for the construction sector in Seychelles. Calculate the unemployment rate for the service sector in Seychelles.
iv. iv. Suppose that the construction sector faces reduced demand, and is forced to lay off 20000 workers. 15000 of them stay in the labor force, while 5000 , discouraged by the layoffs, exit the labor force. Calculate the unemployment rate in Seychelles

Answer 1

There are two types of unemployment: structural and cyclical. To calculate the unemployment rates for the construction and service sectors, proportions are used. After a layoff, the unemployment rate in Seychelles is 7.14%.

Step-by-step explanation:

i. The two types of unemployment are structural unemployment and cyclical unemployment. Structural unemployment occurs when there is a mismatch between the skills of workers and the available jobs. This can happen when there are advancements in technology or changes in the structure of the economy. Cyclical unemployment, on the other hand, is caused by fluctuations in the business cycle. It occurs when there is a downturn in the economy and businesses are forced to lay off workers.

ii. To calculate the number of unemployed construction workers, we use the proportion of unemployed construction workers with respect to the total number of unemployed people, which is the same as the proportion of employed construction workers with respect to the total population. So, there are 10,000 unemployed people and 30,000 construction workers, which means there are 10,000/30,000 * 30,000 = 10,000 unemployed construction workers. Similarly, we can calculate the number of unemployed service workers.

iii. The unemployment rate for the construction sector is calculated by dividing the number of unemployed construction workers by the total number of workers in the construction sector, which is 10,000/30,000 * 100 = 33.33%. The unemployment rate for the service sector can be calculated in the same way.

iv. After the layoff, there are now 20,000-15,000 = 5,000 unemployed construction workers. The unemployment rate is calculated by dividing the number of unemployed workers by the total number of workers in the labor force, which is 5,000/70,000 * 100 = 7.14%.