Question

Use the data reported by the labour force force survey in July 2014 to answer the following questions.

Statistics Canada’s labour force survey reported the following situations in July 2014:

Sarah works 10 hours a week at McDonald’s. She’s available to work more hours but hasn’t looked for extra work.

Kevin spent the first six months of 2014 actively searching for a job but didn’t get hired. He believes there are no jobs so he has given up looking.

Pat quit the job he had for the past two years and is actively looking for a better paying job. He is available to work and he still searching for a job.

Mary is a new graduate who was hired while she was a student to start a job in August.

Johnny quit his band in June and has no job in July and is not looking for work.

Who does the LFS classify as being unemployed, a part-time worker, unemployed person, I discourage searcher, and not in the labour force?

_______ are unemployed, ______ is a part-time worker, _____ is a discouraged searcher, and ______ is not in the labour force?

A) Pat and Mary; Sarah; Kevin; Johnny

B) Pat and Kevin; Mary: Johnny; Sarah

C) Mary and Kevin; Pat; Johnny; Sarah

D) Mary and Sarah; Kevin; Johnny; Pat

How will the labour force change if the following events occurred?

1. Sarah start a second job
2. Pat finds a good job and is hired.
3. Mary takes a job at McDonald’s was she waits to start her new job.

A) Event 2 will decrease the labour force while 2 and 3 will increase it.

B) Events 1, 2 and 4 will not change the labour force.

C) Event 1 will not change the labour force, 2 will increase it and 3 will decrease it.

D) Event 1 will increase the labour force, but events 2 and 3 will decrease it.

How will the unemployment rate change if Sarah quits and starts to search for a full-time job?

A) rise

B) fall

C) remain unchanged

How will the labour force participation rate change if Kevin starts creating football apps in his garage and they turn out to be popular?

A) rise

B) fall

C) remain unchanged

Answer 1

1. Pat and Mary are unemployed, Sarah is a part-time worker, Kevin is a discouraged searcher, and Johnny is not in the labour force.

The correct answer is (A) Pat and Mary; Sarah; Kevin; Johnny.

2. The labor force is the number of people who are employed plus the unemployed who are looking for work. It does not include the retirees, students, discouraged workers or the jobless who aren't looking for work.Discouraged workers are those who would like a job but have given up looking for one.Thus to be considered a part of the labor force, one must be available, willing to work, and have looked for a job recently.

If Sarah starts a second job, it will not affect labor force since she worked part time and was already included in the labor force.

If Pat finds a good job and is hired, it will not affect the labor force since labor force= employed + unemployed and Pat was unemployed but actively looking for a job.

If Mary takes a job at McDonald’s while she waits to start her new job, labor force will not be affected. Although students are not a part of labor force but since Mary is a new graduate, she became a part of the labor force already.

Thus, (B) Events 1, 2 and 3 will not change the labour force.

3. If Sarah quits and starts to search for a new job she will now be a part of the unemployed pool.

Unemployment rate= number of unempoyed/ labor force. Since now the numerator has increased by the denominator remains unchanged, the overall value will rise.

Thus unemployment rate will (a) rise

4. Labor force participation rate= labor force/ working age population.

Since Kevin was a discouraged searcher he was earlier not included in labor force. But now Kevin is self employed so labor force will increase.Since now the numerator has increased by the denominator remains unchanged, the overall value will rise.

The labor force participation rate will (a) rise.