Question

A friend and fellow student shares her employment experience over the last 12-week summer break. It took her one full week to find a job. She started on the first day of week two and was able to keep her job for the remaining eleven weeks. Use this information to answer the following three questions, assuming the unemployment rate is not changing:

1. Calculate the rate of job finding (f) for the summer, using an average rate per week. Enter this value in the box below. Note that if f is the rate of job finding, then the average spell of unemployment is (1/f).
The value of f is:
2. Calculate the rate of job separation (s), using an average rate per week. Enter this value into the box below. Note that if s is the rate of job separation, then the average length of employment is (1/s).
The value of s is:
3. Calculate the natural rate of unemployment (U) using the above results and enter this value in the box below.
The natural rate of unemployment (in percent) is

Answer 1

1. f = 12

2. s = 1.09

3. U= 8.3

Step-by-step explanation:

1. The average spell of unemployment, based on your friend's experience, is 1 out of 12 weeks, 1/12. The job finding rate (f) is the inverse of the average spell of unemployment.

=1/(1/12)=12/1=12

2. The job separation rate (s) is the fraction of employed individuals who lose or leave their jobs each month. s is thus the inverse of the average spell of employment. Your friend's spell of employment is 11 weeks out of twelve, 11/12.

=1/(11/12)=12/11=1.09

3. The natural rate of unemployment (U) can be calculated using this formula: /=11+/. Inserting the values for f and s into this formula yields: /=11+12/1.09=112 = 0.083. The natural rate of unemployment is thus 8.3%.

Answer 2

Part 1)

A student can find a new line of work in multi week. This demonstrates the activity securing rate is 1 position in multi week or 1/1 = 1 employment for each week.

Part 2)

The student can work for consistently 11 weeks. This demonstrates one employment can be proceeded for 11 weeks and the individuals who are jobless will stay isolated from the activity for 11 weeks. This shows the activity partition rate is 1/11 or 0.0909 occupations for each week

Part 3)

Natural Rate of Unemployment = Rate of Job Separation / (Rate of Job Separation + Rate of Job Finding)

Natural Rate of Unemployment = 0.0909 / 1.0909

Natural Rate of Unemployment = 8.33%

However, the result shows that natural and unemployment is 8.33%.