Question

Due to better internet job searching websites, the job finding rate increases in the recent years. In a survey studying the job finding rate in Jan 2019, 420 out of 10,000 unemployed workers report that they found jobs. In the same period of time, a similar survey studying employment status reports that 29 out of 10,000 employed workers left their jobs. What is the steady unemployment rate

Answer 1

6.46%

Step-by-step explanation:

Job finding rate (F) = Rate at which the unemployed people get job

Job Separation rate (S) = Rate at which the employed people loose their job

Steady state level of unemployment = Ratio of Unemployed people to the Total labor (i.e U/L)

Formulae used to calculate the steady state level of unemployment is: U/L = S / S + F

Where F = (420/10,000)*100 = 4.2%

Where S = (29/10,000)*100 = 0.29%

Steady unemployment rate (U/L) = 0.29 / (0.29 + 4.2)

Steady unemployment rate (U/L) = 0.29 / 4.49

Steady unemployment rate (U/L) = 0.0646

Steady unemployment rate (U/L) = 6.46%